Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

MOTOR CAR INDUSTRY

11.5 a.m.

Mr. James Johnson: I beg to move,
That this House requests Her Majesty's Government to appoint an independent Commission of Inquiry to investigate the present difficulties and future prospects of the motor car industry and its place in the national economy, including the relevance thereto of credit and hire-purchase restrictions on the manufacture and sale of motor cars, and Purchase Tax.
I and other Midland hon. Members count ourselves fortunate to be able to debate this Motion today. I sympathise with the hon. Member for Norwich, South (Mr. Rippon), who had to take his Motion off the Order Paper.
As I imagine that many other Midland hon. Members will wish to speak in the debate, I do not wish to speak for too long. My constituency contains tens of thousands of electrical engineers, working with British Thomson-Houston and the English Electric Co., but in the county villages there are thousands of workers who work in the Humber, Hillman, Alvis, Daimler, Siddeley, Standard and other Coventry works, because the villages in my constituency are dormitories for the great conurbations to the north. Many of my constituents have intimate connections with this industry.
I do not wish this to be a post mortem on the car industry. I seek to call attention to its state of content or discontent, as the case may be, and to move the Motion. There has been a post-war boom in the industry, and it is only fair to mention the industry's great achievements since the war. First, there has been an increase of 17 per cent. per annum in output since 1951, which is no mean effort. The car industry has been our biggest earner of foreign currency since the war, and it has been the world's largest exporter of motor cars

since the war, except that since April, 1956, the West Germans have passed us.
Well over 300,000 employees are employed in the manufacture of passenger cars alone. Taking into account the ancillary industries, those making parts and accessories, there are well over 500,000 people occupied in this industry. I shall deal later in some detail with the plans for capital investment, but they total at least £120 million.
Finally, profits—for some people a forbidden term: these are also on a gargantuan scale, for I estimate that the net profits in 1955—that is, after payment of tax—were at least £30 million. In other words, the money which went to dividends alone must have been at least £30 million. Here we have an industry, therefore, which is at the heart of our economy, particularly in the Midlands, and whatever happens to it is of vital moment to people like myself and other hon. Members who have constituencies there.
What has happened? In November, 1955, we were turning out 26,000 passenger cars a week, but in December, 1956, the output was down to below 15,000—from 14,500 to 15,000. I shall ask the Minister many questions today, but I should like first to ask him what has been the output in 1956. Could he give some idea of the catastrophic fall in the last quarter? I am told that in the home market the fall has been perhaps 40 per cent., and that in the export market the fall has been anything between 15 and 20 per cent. I have not the figures with me, but I hope that the Minister will throw some light on this matter.
I was in my constituency last night—indeed, I was speaking to people at Kenilworth in connection with the Leamington by-election—and people around there told me that it is likely that the position of the home market will get worse before it is better. Does the Minister share that view? If so, will he tell us why, and, even more important. will he tell us on what evidence he bases his view?
In Coventry and Rugby, people are exceedingly disquieted—people ranging from Lord Tedder of the Standard Company, down to the lowest paid worker on the floor. It is asked why we


have these troubles which burst on us in February, 1956. There are not many villains opposite facing me at this moment, but it is the benches opposite and the Government themselves that have been the cause of the trouble. Except for the Australian cuts in imports, all other difficulties have been caused by the Government's quite deliberate and cold-blooded anti-inflationary policy. Their financial measures stand out as the prime cause of the trouble. When I talk to managements and workers in my constituency they blame this Government for the shackles which have been put on the car industry.
There is, first, the credit squeeze. I think that the increase in the Bank Rate is terrible—from 2 per cent. to 6 per cent, since 1951. As to hire purchase. I understand that one now needs to pay 50 per cent. deposit on the cost of a car before one can begin to drive it. However, I may be corrected on that point. It is also widely thought that a diminishing Purchase Tax would help the industry to pick up again in these difficult times. Lord Tedder himself, in his annual speech to the shareholders of the Standard Company at Coventry, said that this Government's action since Suez, the petrol rationing following on the folly of the Suez escapade, had been the single biggest factor in the tightening of the conditions in the industry.
Some people in the Midlands think that this Government are more wicked than perhaps they are. They think that the Government's measures are aimed directly at the car industry. Skilled workers in that part of the country, where the engineers earn high wages which are a target for other industries to aim at, point to the militant working class Left-wing leadership that exists. We know that there are Communist convenors at many factories at Coventry and elsewhere, and the workers think that perhaps the Government thought that here was a chance to blunt the edge of that leadership.
I do not think that the Government are quite as cunning as that—as Machiavellian as that. Candidly, and without wishing to be too unkind, I think that they are just bodgers, and are much more clumsy than that. The fact is that the motor car industry is just rather more vulnerable than is, for example, the

television-set industry; and the result has been that the planned financial attack upon the economy of the country—the credit squeeze, etc.—has hit the motor industry in particular. If I were an economist, like my hon. Friend the Member for Stechford (Mr. Roy Jenkins) whom I see sitting below on the Front Bench, I might use delightful jargon such as "elasticity of demand".
Another point which has been put to me is that this squeeze on the home market would lead the firms to export more cars overseas. That is the popular view. I should like the Minister to tell us if it is the fact that this squeeze upon the home market has made those firms send more cars overseas. I think, myself, that only a few thousands more have gone in that way—possibly less than 10,000.
There is a feeling that the manufacturers have been lazy, that they have had this lush home market since 1945, have taken things too easily, and that, with the coming of the Germans with the Volkswagen and others, they are now getting keener competition. The argument goes that it will do them good—I hope that the Minister thinks it will do them good—that it will smarten them up and lead to new models, new designs, and so make them more competitive in this keen overseas market.
I want to say a word about this overseas market. Even this Government could do nothing about the Australian import cuts. Despite the bonds of Commonwealth, we have had those cuts—and there we are. But what information can the Minister give us about the future of the Australian market? From a speech made yesterday, in either Canberra or Melbourne, by a Cabinet Minister, I gather that things are to be easier; that more cars are to be admitted into the Australian domestic market. I do not know if that is so—perhaps the Minister will tell us.
May I put this to the Minister? It is a little disconcerting to some of us in the Midlands to know that the big firms, such as Austin's and others, are opening factories in, say, Melbourne; just as the Americans have done in the past with a firm like the Holden Company. These factories, in time, will obviously be able to satisfy the home market there; and I am told by one


Australian that at those factories it is intended to go into the Far Eastern markets—China and Japan—which, again, will mean more competition there. That will not be competition by the German Volkswagen, it should be noted, or by the Fiat 600 and other Italian cars—the competition of which, incidentally, is hitting our small cars very much—but by our own firms with English-speaking workers in factories inside a Dominion. I do not say that that is a bad thing, but I should like to know how much of that is going on, and be given some information as to its significance in relation to our Midland workers for their future prospects of stable employment.
We have this intense competition from the Volkswagen. I am told that they are better cars. I am not a technician, and perhaps my engineering colleagues who know more about the technical efficiency of the model than I do will bear with me, but I do know that the Volkswagen has cut heavily into our markets overseas. What worries me is that while our exports overseas are falling—one-third, perhaps, to the Commonwealth; perhaps one-eighth to Europe, and particularly badly in Sweden, of course—we find that not only are our sales decreasing in our markets in Europe, but that the Continental manufacturers are beating us in Canada and the United States, even in Australia, where there is an Imperial Preferential tariff in our favour.
There is an overall decline proportionately in our share of the overseas car market, so can we have some statement from the Government spokesman later as to how our exports have been doing lately? What do the Minister and the Government think of our future prospects? There is a great lack of information—I will not say misunderstanding—in the Midlands, and many of us would like to know what the Government think about the export aspect, and if they are doing anything positive in that particular field.
Do the Government and the Minister think that the figures of the last two or three months of 1956–57 represent just a temporary setback; that this is merely part of the cycle of economic affairs; that it is just part of a five or seven years' cycle and that we shall get over this recession? Perhaps the Minister will

tell us whether he is optimistic—I do not know.
As I have said, I am no technician, but I can speak from my own observations, made during two visits to Africa in the last twelve months, in regard to design, sales service and the other things that matter so much in giving value for money to people wishing to buy our goods. I have heard some pungent comments on these matters in Kenya, Somaliland and even in Senegal—let alone Sierra Leone—about our cars. Obviously, if we omit the Jaguar and the Morris Minor, most of our other cars are having a tough time in competition with the Volkswagen and other, particularly American, cars.
I am told that the Volkswagen and these other cars are mechanically tougher in design, and stand up to tropical conditions much better. For instance, the American cars have a higher clearance than have ours, with the exception of the Jaguar. That is important, because in Nigeria and elsewhere there is bush to encounter, the roads are poor and full of potholes, etc., and I am told that our cars fail to stand up to those conditions.
Then there is salesmanship. I go to Liberia—a dollar market—and find the first and the only two Humber cars so far imported there. And the last injury of all was to find our Ambassador himself, the doyen of the Diplomatic Corps, flying the Union Jack on an American Chevrolet car. That is a bit harsh. Our sailors landed there do not like it, and this is all part of the picture, part of the climate in which our salesmen overseas have to fight for orders for cars made by our own people in our own country.
Then there is after-sales service. In Nigeria, I travelled by car from Ibadan, the Western capital, to Lagos, and counted 16 Volkswagens in the course of that trip. I am told that the Germans did not put a single car into Western Nigeria until they had, not an after-sales, but an efficient, shall I say, pre-sales service. They had their service depots ready before they put a single Volkswagen on the roads on the quayside of Lagos harbour.
That technique is what we want—more aggressive salesmanship overseas. Are the Government having talks with the managements of the big car firms? Are they giving any advice at all, and


helping them overseas in matters of this kind—or is it to be left to people like ourselves to exert what influence we can, and put down Questions?
There is a vastly different picture in the manufacture of commercial vehicles. I am told that there is a 15 per cent. increase in our exports of those vehicles of over 6 ton weight. Leyland vehicles are the best in the world, Bedfords are first-class; and we have a technical mastery there which is not so with our passenger cars. It is a lively industry. Why is it that the commercial vehicles are so lively, competitive and popular as opposed to our passenger cars?
My last point in this connection relates to what I would term a malaise in the industry. I have not worked in a car factory, but I have talked to many of the workers. I know that people often talk about "malaise" in our industrial society as opposed to the keen competition in American factories; but, without entering into any delicate topics such as the Briggs dispute, I would say that the managements have sometimes been guilty, not only of careless talk, but of something worse which could lead to misunderstanding and mischievous comment. There is, for instance, the example of Mr. Alec Dick of Standard's who did not fully consult the Cowley shop stewards. There is Sir Leonard Lord, of Austin's an old Coventry schoolboy, who seems to have a pathological feeling about Communist or Left-wing shop stewards and convenors.
It is rather disheartening to find managements, who could be so helpful, making the speeches that they do. Both sides could be better than they are, but management has an even heavier load to bear because it is responsible for organising the industry. I hope that we shall see a happier spirit in that sphere.
To come up to date—to 1957—last month we had more dismissals and extensive short-time working—Ford four days; Vauxhall three and four days, and I am told that 2,000 have been sacked from that firm since July; Standard three days, and so forth. When we get short-time working and when people lose their jobs, the men and their wives suffer.
I want to make a comment on the Government's policy of squeezing workers into industries working for exports where

it is thought they might be of more value. I find in Coventry, Leamington and Rugby the same thing as my hon. Friend the Member for Northfield (Mr. Chapman) found in his survey in Birmingham. I found that some of my constituents who lose their jobs do not go into skilled work elsewhere at £16 a week. They are becoming postmen and bus conductors. They are not becoming coal miners. They are becoming porters at the main line stations at £10 or £12 a week. This is quite a fall in their wages.
I know that the Parliamentary Secretary to the Board of Trade is an old engineer, and in his time twenty years ago people like himself could go to another factory if they lost their jobs. They had their tools; they had been apprenticed. They were skilled men. If they left the Austin works, for example, they could, perhaps, go to Alfred Herbert's machine tool works. One could even become a Conservative M.P. or a Tory Minister. But I do not think there is much scope in Coventry for shop stewards to become Tory M.P.s these days.

Mr. Charles Pannell: My hon. Friend is speaking about skilled labour?

Mr. Johnson: Yes. One cannot do that these days. People cannot be moved into other skilled jobs.
I am told that the Ministry of Supply might place contracts from the Midlands elsewhere. My hon. Friend the Member for Coventry, South (Miss Burton) has been concerned with this theme for many months, if not years. In other words, if one cannot make car engines, one makes aeroplane engines. But I thought the present Government were cutting back on armaments in order to economise? Do we then have contracts for American aeroplanes and American engines? I do not know. I should like to know if there is any chance of that sort of work coming to the Midlands. If that does not happen, what do the Government intend to do? People are very worried about the situation.
I should like to quote part of a letter sent to me by the able young secretary of the Coventry District Committee of the Confederation of Shipbuilding and Engineering Unions, Mr. Harry Urwin, who followed an equally shrewd union


leader, Mr. Jack Jones. He said in his letter:
You will notice from the information supplied that over 90 per cent. of Britain's passenger car production is concentrated in the hands of five manufacturers—Fords, Vauxhalls, B.M.C., Standards and Rootes. The two American-owned firms—Vauxhalls and Fords—are pursuing huge expansion programmes costing over £100,000,000 n an effort to completely capture the British car industry. The only powerful British firm left is B.M.C. It seems inevitable that within a short time instead of a big Five Group of firms there will only be a big Three—Fords, Vauxhalls and B.M.C. This would create a real problem for Coventry and district as the two smaller firms are in this area. We are anxious that this problem should be faced up to as quickly as possible so that alternative work and Government assistance in the form of new contracts can he encouraged into the area.
That is all very well. But what did I see in the Manchester Guardian on Wednesday morning? I saw that Vauxhall's are advertising for Coventry labour and are wanting at least 200, if not more, skilled Coventry engineers. That is a crazy position. American capital is being invested in Luton to develop the car industry there, which is going to tempt away our skilled workers from the Midlands, with all the attendant difficulties of supplying housing, schools, medical services and the like.
This is a difficult problem. I beg the Minister to apply himself to it, because it will create enormous sociological problems in addition to the purely economic ones of pay packets; and indeed the wife's temper if she has to go to a house that she does not like! This is quite a human question and goes far beyond the question of American capital making 10 per cent. or 12½ per cent. when a factory is squeezed out of the Midlands.
What is the Government's policy about this? Does the Minister talk about this to his colleagues and to the motor car manufacturers? The hon. Member for Dagenham (Mr. Parker) pursued this topic in connection with the question of financial investment in the industry last Tuesday. We received no satisfactory answer last Tuesday. Perhaps we shall get one today. Perhaps we shall get a more courteous reply than we had last Tuesday. We shall see.
In my part of the world the position at present is something like this. Since June last year over 8,000 Coventry and district car workers have lost their jobs;

16,000 are working short time, some only two or three days a week. I agree, and so do the workers, with Lord Tedder's views in this matter. The situation is due mainly to petrol rationing, since Suez. Perhaps I may quote again from this letter from Mr. Urwin—

Mr. Maurice Edelman: My hon. Friend said that the difficulties in the motor industry are due mainly to Suez. Is it not the case that there was a serious decline in exports long before the Suez incident, and that that is the real reason for the difficulties and for what he described as the malaise in the motor industry?

Mr. Johnson: I could not agree more about the long-term burden and difficulties of the industry. I merely say that this has been accentuated since Suez. It has been almost doubly accentuated, and has culminated in the figures which we have for January and February.
I will make this final quotation. I hope that the Minister will look into it and do his very best to give us an answer when he replies. These again are the words of Mr. Urwin:
We feel in this area that the Government should assist the industry by making a substantial concession in Purchase Tax for a temporary period. In the same way that the 1s. tax on fuel is to operate for the period of petrol rationing only, we feel that Purchase Tax could be substantially removed for the same period. This would encourage customers to take delivery of cars although not in a position fully to use them at the present time
That is the main gist of what I wish to put to the Government. It would be a thoroughly bad thing if this "slumplet"—I will not call it a slump—were to last. We can be competitive in overseas markets and compete against the Germans, the Italians and others only if we have a buoyant home market from which we can, as it were, jump off. Both the Germans and the French have very large and buoyant home markets. We need to encourage the market at home to give the manufacturers a chance to push off and compete efficiently and successfully overseas.
The Government have accepted the Welfare State, so they tell us. They have, I think it is fair to say, accepted planning in the widest sense of the term. The Confederation of Engineering and Shipbuilding Unions, on 12th April last,


called for an inquiry in the industry, passing a resolution:
That in view of the prevailing situation in the motor and allied trades, immediate representations be made to the Government to undertake an immediate fact-finding inquiry into the general position of the motor car industry, including design, capital investment, profits, export organisation and restrictions, and distribution costs.
I could not agree more with that. The purpose of that resolution is embodied in our Motion today.
Our people in the Midlands are very anxious indeed. They are ordinary decent folk, very worried about their future. The Minister knows that as well as I do, and all other hon. Members also know it. I hope that he will endeavour to give us an honest and as full an answer as he can in order to allay some of the anxieties which we all feel about the industry.

11.32 a.m.

Miss Elaine Burton: I beg to second the Motion.
We consider ourselves fortunate in being able to move this Motion as the first Motion on the Order Paper today. I wish to divide my remarks into certain definite sections. I wish, first, to deal with the future prospects of the industry as regards exports. Next, I shall deal with what I regard as one of the major present difficulties in the industry, the employment and manpower situation. Lastly, I shall consider Purchase Tax.
In January, 1956, the exports of the industry were more than one-fifth below those of a year ago. Bringing the matter up to date, on 19th February, I read a statement by the British motor manufacturers saying that the output of British cars fell last year by almost 190,000 below the 1955 figure. Equally alarming, I think, was the further information that 42,000 fewer lorries and vans were built. If my information is correct, in December, 1956, mainly as a result of Suez, which was, of course, the responsibility of the Government, car exports fell to 20,930.
I hope that the Minister will give us the export figures for the whole of 1956 as compared with those of previous years. The figures which I have indicate that in 1956, taking all vehicles, we exported 317,992, showing a falling off

from 1955 of 55,211. Obviously, in the national economy and in the motor industry the actual number of vehicles is important; but I feel that more emphasis might well be placed upon the proportion of exports to actual production.
Recently, as the Minister will know, a car firm in Coventry for which both the Minister and we have great admiration, the Jaguar Car Company, had a most disastrous fire. This company, I think I can say, has just about the finest record of any in the matter of exports. A point which I had not the opportunity of bringing out in Question Time the other day, but which I should like to emphasise now, is that the exports of the Jaguar Car Company reached, and have maintained for some time, the very fine figure of 75 per cent. to 80 per cent. of total production.
Before 1951 the car industry exported two-thirds of its output. Twelve months ago it was exporting less than half. I have already asked the Minister for the actual numbers, but I should be glad if he would tell us, to the latest convenient date, what is the proportion of total production of all vehicles which is exported.
I come now to a question emphasised by my hon. Friend the Member for Rugby, which the Minister, in all fairness, will, I am sure, agree is most important. What is the intention of the Government in the matter of exports from the motor car industry? What do the Government want the workers to do? Do they want to maintain the position that the country has held for a very long time in this industry? I am not sure whether it holds it today—I should be glad to know—but for a very long time we were the greatest car exporting country in the world. Do the Government want the industry to maintain that position, or do they see the industry as a dwindling one, would they recommend the workers to get other jobs? There is no Member of the House of Commons, of whatever party, who would not agree that the industry has a right to know the answers to those questions. We have not had them yet.
Putting the matter quite simply, the Labour Government worked exports up to the record level of two-thirds of production by insisting that firms had to sell


cars abroad to get the steel to make the cars. We have been told a lot about the benefits accruing after five or six years of, to misquote the hon. and gallant Member for Portsmouth, West (Brigadier Clarke), Tory rule, though I prefer to say six years of Tory misrule, six years which have meant even greater misfortune for the car industry in particular.
The Government say they do not believe in controls or in the control of steel. The Government do not believe in forcing up exports in that way. They say that they do not believe in planning, but, my goodness, they believe in planning by redundancy and unemployment. I must say that in Coventry we prefer the planning of physical controls on steel to the misery of redundancy and unemployment.
The Minister is quite entitled to think that I am being unfair, but if he does will he tell us how he suggests that other car firms should reach the excellent standard set by the Jaguar Car Company, and export more than two-thirds of their production? And if they do not do that, what will he do about it? Will he leave the position as it now is?
Like my hon. Friend the Member for Rugby (Mr. J. Johnson), I am not a mechanic. I am not an expert in these matters, but I should have thought that the point I am about to make was perfectly obvious. I should have thought that the Government would have realised—not now, but over the last two or three years—that if there is a cut in car production the inevitable result is the pushing up of unit costs, which makes exports still more difficult. That is quite obvious. One does not have to be an engineer to find out that. If the car industry, for any reason—and I shall show that the reason is Government policy—is unable to increase its production, how do the Government expect the industry to reduce prices and sell more in the export markets?
Still on the subject of exports, if the Government expect the workers who are now redundant and out of work to leave the industry, how do they propose that the export drive, upon which the country depends, should be developed? Do the Government agree that building up exports should be the main task of the motor car industry? If so, do they believe that that should include a greater emphasis on commercial vehicles? Should it include a genuine effort to develop

East-West trade? Those two matters are closely linked. In the Midlands—we may be wrong—we are not firmly convinced that the Government have pushed ahead with the development of East-West trade as fast as they could.
I will put it no stronger than that, but there is that feeling and perhaps the Minister will comment on it. If the Government wish to put the export drive into the forefront of the programme for the industry, what are they prepared to do to persuade manufacturers to that end, other than making the workers redundant? Do they want the workers to leave the industry now?
I now come to my second section, to what I consider to be one of our greatest difficulties in the industry at present, the position of manpower and skilled labour. I should like to say how glad I am to see the Parliamentary Secretary to the Ministry of Labour in his place, because it is very difficult, as I am sure he will agree, to separate the two Ministries in this case. Up to the time of the Government's credit squeeze and other restrictions, at the end of 1955, the car industry was booming and record production levels were being established. Everybody knows that.
As a result of the Government's action and the credit squeeze, short-time working was introduced in many Coventry factories in the early part of 1956. We had substantial redundancies in the middle of the year. I believe that those redundancies and the underemployment in the motor car industry were quite definitely the deliberate policy of the Government. We did not need to wait for Suez. We can go back two or three years. I state quite categorically that it has been a deliberate policy of the Government to cause under-employment in the motor car industry.
It has brought back to people in my constituency the memories of the dread of unemployment which many of the older people remember only too well. When that is said in the House, hon. Members opposite say that that is going too far and that there is no chance of returning to those days of unemployment. Do the Government agree with that? When hon. Members on this side of the House ask whether the Government care about a continued policy of full employment, Ministers show great indignation


and give us assurances that they do. I like to be charitable and believe the best of people, but I find it very hard—as do the workers in the motor car industry—to believe that the Government do care about a policy of full employment, when consistently, for the last two or three years, they have been the cause of putting more and more people on to the labour market.
When we have asked that extra work should be directed to these areas, there has been no result at all. The proof of the pudding is in the eating and this has been very unpalatable pudding for my motor car workers in Coventry. This is a city of motor car industry and it would be useful for the Minister to realise what the present position has meant to the skilled workers in the industry, the skilled workers on whom the future of the industry depends. And, also, what it has meant to those workers who, although perhaps not highly skilled, have become skilled in working on the production lines in the big Coventry factories and who are now definitely out of work. If they leave the city and go elsewhere, Coventry will not in future produce those cars which it has produced for export in the past.
In Coventry, about 60 per cent. of the working population is engaged in the motor car industry. The proportion in the Midlands as distinct from Coventry is 25 per cent. of the working population. I believe that the figures I am about to give for Coventry relate in the great majority of cases to the motor car industry itself.

The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Robert Carr): I am sure that the hon. Lady does not want to get the facts wrong. The percentage of the working population in Coventry employed in the motor car industry is 30 per cent., and not 60 per cent.

Miss Burton: I am grateful for that. I got my information from the unions. Perhaps we should leave both figures on the record and check them later.

Mr. Donald Chapman: Is it not the percentage of workers in manufacturing industry in Coventry to which my hon. Friend is

referring, in which case it would probably be 60 per cent.?

Mr. Carr: I am referring to the percentage of the working population, which, I think, is the fair way.

Miss Burton: I think we were both fair and both right. I think that the interjection of my hon. Friend has shown that my figure of 60 per cent. is right.
In Coventry, in December last year, the number of wholly unemployed was 2,228; in January, the figure had increased to 3,036; and in the present month it has risen by more than 500. to 3,551, most of the people concerned being workers in the motor car industry. What makes the position even worse—and I suggest that the Minister will have to turn his mind to this question—is that, at the same time, the vacancies available to these people in Coventry have decreased.
Over the past few weeks the Minister of Labour has given me some figures, and he gave me some others yesterday. Until the right hon. Gentleman did so yesterday—and I do not think that he had any ulterior motive for doing so—I had not thought of including juvenile vacancies; I was dealing with vacancies for men and women. However, let us make the case the very worst that we can for the motor car workers and for me. On these figures, notified vacancies in Coventry amounted to 1,024 in December; 775 in January and 723 in February.
If, however, we take the figures for men and women only, and not juveniles, the situation is even worse. The notified vacancies in December were 661; in January, 597; and, on 6th February, 564. So there are 564 vacancies available for 3,551 men and women who are wholly out of work. Even on the arithmetic of the present Prime Minister and past Chancellor of the Exchequer, one figure does not balance out the other.
I am very anxious to know what is to happen to this skilled and semi-skilled labour, which is at present walking the streets of Coventry, and I pay the Minister the compliment of believing that he is also very anxious about it. In addition to what I have just said, what is worrying the trade unions and myself about the position of the wholly unemployed male workers in Coventry is


that the number who have been unemployed for six months or more is steadily increasing.
The Minister probably has not got the actual figures, but I believe that the House will be quite horrified to know them. As a percentage of the total unemployment in this group of wholly unemployed male workers the figure in respect of those who have been unemployed for more than six months rose from 2·6 per cent. in June, to 4·2 per cent. in September, and 11·4 per cent. in December, 1956. Most of those people are employed in the motor car industry. To anybody who knows anything about unemployment a proportion of 11·4 per cent. is very shattering. It is much worse than being merely disturbing.
At present, 3,551 people are unemployed in Coventry, and between 15,000 and 17,000 more are on short time. I cannot give a closer approximation than that, because it is very difficult to obtain figures for short-time workers. I am indebted to the unions for the figures I have been given. Normally, I should have had to depend upon manufacturers notifying labour exchanges, and they do not always do so to the full extent.
Speaking in the economic debate on 12th February, the Minister of Labour gave the unemployment figures for the country as a whole, and not merely for Coventry, as 383,000, which is 1·8 per cent., and he said that it might well have been worse. He continued:
However we look at these figures—and I have tried to make every qualification—surely a figure of 1·8 per cent. at what is normally the seasonal peak is full employment by any conceivable standard…"—[OFFICIAL REPORT. 12th February, 1957; Vol. 564, c. 1207.]
We in Coventry do not consider that an unemployment figure of 3,551 is full employment by any conceivable standard. I appreciate that the Minister of Labour looks at the global figure, but it is not much help to make the sort of remark to which I have referred when Coventry at present has a figure of 11·4 per cent. in respect of men who have been unemployed for over six months.
Yesterday, at Question time, I was driven beyond all endurance to make a comment about the visit of the Parliamentary Secretary to Coventry. Although I feel very strongly about the Government, I do not wish to be unfair to the

hon. Member. I am glad that he is here, because I want to tell him why I said what I did. The Parliamentary Secretary came to Coventry, and I am sure that he came prepared to do his best. He probably did his best, but he failed to realise that it is not the slightest use coming to a city which, at the time, has more than 20,000 men on short time and 3,000 men out of work, and giving a dissertation about redundancy, saying that it is better to have a little redundancy at present than a whole lot more unemployment later.
I know that I am paraphrasing what he said, and that his speech may have seemed all right to him, but it went down very badly in my city. I tried to bring that fact to his notice by tabling a Question, but it was quite properly ruled out of order because the remark to which I have referred had not been made by a Minister.
The Minister will probably mention that Vauxhall Motors have sent people to Coventry in an endeavour to recruit workers for their factories. I shall be very glad if the jobs they are offering are such that Coventry workers can take them. I do not know whether the Minister has any additional information about these matters, but I was told that the people who came from Vauxhall Motors said that they hoped to recruit about 70 semi-skilled production workers, and that about 150 unemployed workers have made inquiries about these positions at the unemployment exchange in Coventry.
Having given that long background to the matter, I now turn to an actual question on skilled labour in the motor car industry. Do the Government consider that skilled workers should move to similar work in other parts of the country? A few minutes ago I made a remark about the present Prime Minister and his arithmetic. I was looking up some of the comments he made in a debate last year, when he told us that there were one and a half jobs for every unemployed worker, if we took the position as it existed throughout the country.
Do the Government consider that people should be helped to move to these jobs in other parts of the country? If so—and I should be glad if the Minister could give an answer to this—are the Government prepared to discuss with the unions and the employers


adequate guarantees for the maintenance and rehousing under redeployment conditions of redundant workers? Secondly, are the Government prepared to discuss with the unions and the employers what can be done about retraining?
I know that this is a thorny problem, but I have talked it over with the unions in Coventry, and we all think that it would be helpful if the Government were to say something about it apart from merely saying that the matter should just be left to the industry. Some of the unions in Coventry have spoken to me about what I think is a very difficult group in the motor car industry at present. The Parliamentary Secretary will probably be aware that there are a good many men in Coventry who have acquired a certain amount of skill. That skill enabled them to carry out a particular job with their particular company, but they are not competent to undertake specialised jobs in other factories which are not manufacturing on a mass-production basis. That is our real difficulty.
The unions have told me that they feel that some additional retraining of men who already have a certain amount of skill would mean that they could fill the more specialised jobs. While recognising that this is a matter for the unions, the employers and the Government, I am quite sure that the Parliamentary Secretary would agree with me that it would be better to spend money on retraining these men than to have skill lying idle and men receiving unemployment pay.
There are two further important details on this matter of labour in the motor car industry. The first is that it is obviously very essential that the Government should have the good will of the unions. Unions and a Government are necessary one to the other. Does the Minister realise how more than irritated is the Confederation of Shipbuilding and Engineering Unions, which speaks for all these unions in Coventry, about the matter of fee-charging agencies? I went to one of these agencies in Coventry and had a look at the vacancies advertised in the window. Does the Minister think that at a time like this private enterprise should make profits out of men who are unemployed?
I can tell the Minister that the Coventary District Committee of the Confederation is not prepared to stand for it. It believes that all the vacancies in the motor car industry—I am speaking now for Coventry—should be notified to the employment exchange. I have been told quite categorically by these trade unionists, who are responsible men, that some of the employers and officials in the car firms prefer to communicate with the agencies direct and that this has got to be stopped. I hope that the Minister will look at the question.
Although I am not sure that the next point which I wish to raise is a fact, I think that the Minister ought to know about it. I have been to Coventry a good deal lately, where many of these men are out of work and make this complaint. I think they have a case here. They tell me that when they go to some of the factories for jobs they are asked for qualifications which are out of all proportion to the jobs for which they apply. They have shown me some of the lists of qualifications for which they have been asked. I admit that these lists do not convey very much to me, because I am not a mechanic, but the men concerned have told me that the qualifications asked for are quite ridiculous.
I say to the Minister—he may be rather shocked, but I say it in all seriousness, and I believe it—that there are some employers in Coventry who have got the men where they want them, and that that is causing a lot of ill-feeling. Not long ago a man came to me in Coventry and told me that he was one of nine men who had been to look for a job and had not been lucky. I would like the Minister to be sure that all the employers in Coventry are really trying to fill their vacancies.
I now come to the matter of Purchase Tax. I am sorry if I am taking rather a long time, but I feel strongly on this subject, and it means a lot to my people. The Coventry District Committee of the Confederation of Shipbuilding and Engineering Unions has asked for Purchase Tax on motor cars to be dropped for the duration of the emergency. I support them. I admit that if one is not a Member for a motor car constituency there is probably a good case for saying that this should not be done, that it is a parochial interest and that if


it is done in the case of motor cars, why not for other things. I am parochial on this matter. We are all parochial where the interests of our own people are concerned.
Air Marshal Lord Tedder is now Chairman of the Standard Motor Company. I am quite sure the Minister knew that he was going to hear something about Lord Tedder in this debate. At the Standard Motor Company's annual meeting, in December, Lord Tedder said:
Quite frankly, unless the Government are willing to find some immediate way of relieving the burdens so as to allow the industry to maintain a reasonable level of production and sales, one can see no prospect whatever of maintaining exports, and every prospect of the whole industry being involved at a very early date in a dangerous crisis with all that that implies for its labour force and shareholders.
In view of what the Government have not done for the industry, I am asking for a reduction in Purchase Tax while the crisis lasts. I believe that that would give a great fillip to the industry.
The Coventry Evening Telegraph is not a newspaper of my political persuasion, but on 19th February—only three days ago—it published a leader from which I propose to quote only two sentences. However, they are important sentences in view of those parts of the country which are not affected as Coventry is in this matter. The newspaper said:
If we look for hunger and want in Coventry today, fortunately it is hard to find, but let there be no mistake that a drop in income while keeping up with commitments incurred can impose real hardship on families, and be a matter of pressing anxiety. Let those who are fortunate enough not to be affected by this decline reflect how they would feel if they had to face a corresponding family crisis. Such a strain can be a demoralising experience.
It can, and I think that when we are discussing great industries we should not lose sight of the very human strain that exists underneath.
One can only quote from an example. As I am often a nuisance to the Board of Trade, I am very glad to have an opportunity of reiterating my thanks to the Minister who is to reply to this debate for his help in a certain matter. He knows that just over a fortnight ago an unemployed motor car worker—one of the people, I hope, whom he wants to

keep in the industry—came to me in Coventry to tell me about his troubles. This man lives in a caravan. He had paid just over £400 out of some £500 for the caravan. He told me that the local office had threatened to take away the caravan on the next Friday, that was, in six days' time. He had just lost his job, was in receipt of National Assistance of, I believe, £4 5s. a week, and his wife was expecting a baby. He was asked to pay over £10 a month on threat of losing his caravan. Thanks to the Minister, that has been stopped, but the fact is that the man would have lost his caravan if the matter had not been raised.
Many people in Coventry are trying to buy their houses. What are they to do now? Some have hire-purchase commitments and cannot keep up the payments. When this trouble first began last year, I went to Coventry week after week in the summer and early autumn. What shook me more than anything else when I went in December last was to see the difference in the spirit of the men who were still out of work.
Last December, in Coventry, I saw in the faces of the men who had been out of work for more than six months the same anxiety and worry as I saw in South Wales in the 1930s. And I could not do anything for them. I hope very much that the Minister will be able to do something. The Board of Trade is responsible for many things, and, among them, for contracts and for work being sent to different parts of the country. I wish to ask the Parliamentary Secretary whether, in conjunction with other people, he will bear particularly in mind the difficulties of Coventry. I ask him to remember the things I have said in this House in an endeavour to keep these unemployed men in the motor car industry, and also in Coventry, which I think is important.
I have asked about work which could be done in Coventry in connection with British Railways. I have indicated that the Daimler Company is to vacate a Government-owned factory there and I desire to know whether the Minister will see that other work goes to Coventry to occupy the men who were employed there. The other day we managed to pin down the Lord Privy Seal to saying that he would discuss the whole matter with the Prime Minister. Last March, I asked


the Government to have an inquiry into this industry and I repeat that request today. There should be an immediate inquiry into the general position of the motor car industry, which should include an investigation into the points I have raised, and also into the questions of design, capital investment, profits, export organisation, restrictions and distribution interests.

12.12 p.m.

Mr. Charles Pannell: My hon. Friends the Members for Rugby (Mr. J. Johnson) and Coventry, South (Miss Burton) have a constituency interest in this matter. My interest is not quite the same. I represent a constituency in the West Riding of Yorkshire which played a large part in the industrial revolution, and where is represented part of that sector of the engineering industry from which has been sucked a great many men and much material to build up the motor car industry.
However, I have a professional interest, because if I presented my union card in Coventry undoubtedly I should go on to a factory floor and, no doubt, in due course, be elected a shop steward. Then I could plague the life out of my hon. Friend the Member for Coventry, South—the "Lady Godiva" of Coventry—who, in her speech today, proceeded to strip every stitch off the Parliamentary Secretary.
I wish to examine the industry against an economic background. The Leader of the House has spoken about doubling the standard of living in this country in the next twenty-five years and I think we are entitled to ask how that is to be achieved. I suggest that it must be achieved by the fullest possible development of our industries, including the motor car industry which is our greatest exporter. The record of the motor car industry since the war has been outstanding. That must be the answer to those people who say that the industry is too big already. That industry must get bigger if the country is to build up the better standard of life about which hon. Members opposite speak so often.
The ramifications of the motor car industry cover a very wide field, private cars, trucks, A.E.C.'s and Leylands, for example, on the one side, and, on the

other, components, including tyres, vehicle equipment, ball bearings, radiators, and the hundred-and-one things which go to make up the industry. People often refer to a motor car as if, in some way or other, it is produced in one piece, but it is not. It is interesting to remember that by 1954 over 1 million vehicles were produced in this country, which is 50 per cent. more than in 1950. There was a terrific increase in productivity in the industry with very little increase in the labour force. In effect, the industry obeyed the dictum of Sir Stafford Cripps to increase productivity with comparatively lower costs.
I do not wish to bore the House with too many quotations, but I have here an article from Lloyds Bank Review of October, 1955, which was written by Mr. George Wansbrough, and from which I will take the case of Vauxhall's. Mr. Wansbrough refers to the number of units produced in 1954, which showed an increase of almost 50 per cent. over the output for 1950. He writes:
The percentage increase in the number of passenger cars was greater than the number of commercial vehicles, whose value per unit is higher. On the other hand, since 1950 Vauxhall's have extended their production of commercial vehicles to a greater degree into the larger size of trucks. Allowing for the increase in size of their passenger cars, and for the increasing proportion of spare parts business, an increase of more than 50 per cent. in the physical volume of output is consistent with the figures. The total money turnover in 1954 showed an increase of 110 per cent. over 1950, which even on the assumption that prices rose by as much as 25 per cent., would still indicate an increase in physical output of 68 per cent. over 1950.
By comparison, there was an increase of only 25 per cent. in the labour force, of 30 per cent. in the gross book value of land and buildings and of 67 per cent. in the gross book value of plant, machinery, equipment and tools. In physical terms, therefore, and eliminating the effect of price changes, it seems as though an increase of some 60 per cent. in volume of output was achieved with an increase of less than that in the physical amount of capital employed and of only 25 per cent. in the amount of labour employed.
I think that brings out the point quite forcibly that there has been a great deal of technical know-how and a great deal of willingness displayed on the part of the trade unions.
When I hear discussions similar to those which took place in the House yesterday, when we reached a culmination of a long wrangle about whether we


should increase the speed limit for heavy vehicles from 20 m.p.h. to 30 m.p.h., I remember that my union deals with that sort of thing every day of the week in connection with the constant alteration of prices on the factory floor, because engineering is a completely dynamic industry. If, in future, we are to build up this industry, the obvious question is: where are the buyers to come from? I am sorry, but I can hardly hear myself speak above the noise coming from the Government Front Bench.
At present, in terms of population, in the United States of America one person in three has a motor car; in Canada, the proportion is one in six; in Australia, one in eight; and in the United Kingdom, one in 16. The question is: are we to sell cars in the future at home or abroad? I do not propose to join with those who paint a rosy picture and speak of panaceas to get the motor car industry out of its difficulties immediately. We must face the problems of the industry in the concept of the next twenty-five years. I have never believed that full employment meant one job in one factory in one town in one lifetime.
The concomitant of that is that in a buoyant economy people must be compensated adequately for shifting from one town to another. We did it during the war. If we say that we are to have a dynamic economy, a certain redundancy,—then that policy must be adapted so that the victims of this buoyant economy are properly compensated, properly transferred and their removal expenses looked after. These things present no difficulty when troops are moved from one place to another. If this is to be an economic battle, there is no room for the hire and fire or hit and miss mentality of the thirties.
The motor car industry will, in the long run, conform to the classic pattern whereby the home market bears the bulk of operating costs and exports yield for the manufacturer a price nearer to the margin of cost. That is usually the case.
When considering the home market, it is interesting to remember that in September, 1952—these are the only figures I could get in the rather short time in which to prepare for this debate—there were 2½ million cars registered in the United Kingdom as against only 2 million

incomes in excess of £750 a year. These figures are an extremely interesting reflection of the desire of people to own a motor car.
When we consider the home market, we are entitled to ask what steps should be taken for its expansion. The first step unquestionably is new roads. This industry cannot be divorced from social policy. We cannot face the ever-mounting deaths and the carnage that takes place on the roads and still continue to push motor cars on to Britain's inadequate roads. It is quite useless for workers and managements to argue questions of split-second savings in time and motion study when we waste minutes, days and hours on the roads, which, after all, are the conveyor belt of British production. Therefore, the first thing to be done for the motor industry is to embark upon heavy capital expenditure for the roads.
I said in my last Election address that I would put roads as the highest priority in my list for capital expenditure, for a great many reasons beyond those merely of the motor industry. It is salutary that even as a result of petrol rationing the number of deaths on the roads has fallen. There is no question whatever that our roads cause dislocation, frustration and exasperation. The existing roads are an indictment of our economy. When we survey Britain's roads, we cannot call ourselves a modern industrial nation.
Next, I come to the idea of the revision of Purchase Tax. I could not follow the argument of my hon. Friend, who suggested that somehow or other Purchase Tax could be remitted for the duration of the slump caused by petrol rationing and imposed again afterwards. What would happen to the value of products throughout the industry? Such a method, I should have thought, would be a great disadvantage, even in the short term, to the industry itself.
There are, however, other considerations. There is still an element of luxury in motor travel. I was looking at the list of other goods which attract a similar Purchase Tax of 60 per cent. on their wholesale value. They include refrigerators, washing machines, vacuum cleaners, television sets, and electric fires. Kitchen utensils and lawn mowers bear 30 per cent. tax. I defy anybody, even


from Coventry, to take part in any election and tell the women who want washing machines and other labour-saving devices that they would give priority to motor cars in the remission of Purchase Tax instead of to the other articles I have enumerated.
I want to see the whole pattern of taxation altered. I do not consider Purchase Tax to be a good thing for engineering goods, anyway. A sales tax would be far better. I have a list of the articles which carry sales tax throughout the United States, where it is a much more intelligent arrangement. The question of the Purchase Tax must be considered against much wider considerations than merely the immediate alleviation of what, we hope, is only a temporary recession. I am doubtful whether the Trades Union Congress would agree to such a temporary remission as has been suggested this morning. Engineering workers in other parts of the country, including those in my constituency, are all anxious to press the priorities for their own products.
During the past year, I have had the great advantage of spending three months in the United States and a month in Africa. Some people forget that the British motor car necessitates the use of about 80 imported materials, including cotton, copper, steel alloys and sheet steel for car bodies. This means the expenditure of dollars and foreign currency, which is not to be disregarded in terms of Britain's economy. To reduce my argument to an absurdity, it could be said that if Britain's export of motor cars was to cease completely the industry would be a burden on the economy and a liability to other industries, for without dollars a motor car simply cannot be built.
Nobody can survey the export position and fail to be considerably alarmed. I have an interesting list of the imports of motor cars into the United States from 1953 to 1956. These are the figures for British imports: In 1953, 26,593; 1954, 24,187; 1955, 25,650: and 1956, for the first half year, 15,787. I am aware that these figures show a tendency to rise, but let us consider the imports of other countries. For example, in those same years the imports of cars into the United States from Germany totalled 2,116, 7,455. 32,050 and, in the first half year

of 1956, 33,343. The corresponding figures for French cars were 196, 276, 1,142 and 2,368.
Nobody can look at those figures and fail to be considerably alarmed. We certainly need a fact-finding inquiry into the industry. We cannot view the future merely by looking at the prejudices of the employers and the anxieties of the trade unions. Such an inquiry should attract evidence from those who try to sell cars in other countries, particularly in the United States. We should call for reports from our consuls and commercial attachés.
Incidentally, I should like to give the Minister some impressions of my visit to New Orleans last June. I went into International House, a unique establishment in the United States, where practically all the countries have their consuls, commercial attachés and the like. I was so staggered at what I found that I walked from the top to the bottom of the building and then walked all the way up again to make sure that my eyes were not deceiving me.
On the first floor, the best accommodation of the lot was possessed by Germany and Italy, with a first-class exhibition on the ground floor level of the machine tools and all the kind of things which engineers recognise as valuable capital equipment. On the second floor were represented Switzerland, South America, Belgium, Holland and Canada. They also had comparable stands or, we may call them, shop windows. On the third floor were represented Italy, France and Cuba. On the fourth floor was represented Japan and also Great Britain.
What did Great Britain have in its shop window? I noted the things down. It had coats of arms, toy soldiers, dolls' houses, a soccer football and racing sticks—the sort of thing that one sits on when tired at a racecourse. Britain shared that floor with West India and Porto Rico. I made inquiries and, naturally, those concerned were very cagey. Apparently, it was nothing to do with the British consul who go in on the ground floor, metaphorically speaking, before International House was opened, to try to reserve it; but between the Board of Trade, the Minister of Works and that overgrown monstrosity, the British Embassy, in Washington, they "passed the


buck" from one to the other so that in the end someone had to take a local decision and dash in on the fourth floor—the only space left. This happened in New Orleans.
I challenge the Minister to take up that story. It is perfectly true. When I met the commercial attaché, who was, no doubt, a keen man and the best type of representative, he was not pleased about it. I want to make it quite clear that there was no one in New Orleans who was responsible for that.
The British Embassy in Washington has more people working in it than the Foreign Office at Whitehall. The most melancholy thing that concerned me during my three months in the United States, during which I was inquiring about the motor trade, was my contact with the British Embassy in Washington, and particularly with the so-called information services. I went from place to place and told the British Embassy where I was going and that I hoped that the consul would be advised, but no one told him.
I have had a lifetime of experience in the engineering trade. It is true that I went to the United States as a guest of the Americans, but if I could not do something for the people on this side it would be a bad show. But I did not receive a lot of encouragement. My tour included Boston, Washington, New York, Detroit, Chicago, Kenosha, Atlanta, San Francisco, Los Angeles, Dallas, New Orleans, and back. In every one of those cities I made inquiries about British motor cars and I have had a considerable fan mail since I came back. Even a minor inquiry, calling for reports from every British consul on why we were not putting the British motor car industry over, would be a great advantage.
I had personal experience in Boston that the supply of spares was erratic. My experience in the Port of New Orleans was that, in the main, the British motor car people sent their goods through New York. There was a luxury car there—and I have referred to this in a previous speech. I do not want to mention particular makes of cars, for obvious reasons. I have had this out with the manufacturers since and I am not saying anything under the protection of privilege here that I have not taken up with them. There was an expensive British car there which was lacking a particular part. The agent

was prepared to have it flown from New York. It was an integral part and there was not one in the United States.
I want also to refer to the particular case of a car with a broken windscreen which a man had been trying to sell for nine months. I took that up with the maker and he said that the windscreen was there all the time, but that the main agents did not know anything about it. I took that matter up with the hon. Member for Twickenham (Mr. Gresham Cooke). The Minister will not laugh this off as a small thing, because I am trying to do what the Americans say, "Come down to cases." These are symptomatic of a wider malaise.
The most uncomfortable ride that I had in West Africa was in the back seat of a Jaguar. In the back seat the windscreen gives no vision at all without one having to bob up and down. When one compares the Jaguar or the Rover on West African roads against the Opel "Kapitan" there is no question which one will ride in. Those cars are not built for those roads. The manufacturers look on their production for those places as an overspill from the home market. Even Australia builds its Holden car for its own use.
Then we come to the question of the success of the Volkswagen. The Minister may remember that a team of experts went out in 1946 to look at the Volkswagen. It said that it was no good and, in effect, "We will give it to the bloody Germans." There were other people who said that, too. They wrote the Volkswagen off.

Mr. Speaker: The hon. Member should not use unparliamentary language. If I heard him aright he used an adjective in front of "Germans." I am not sure whether I did quite hear it.

Mr. Pannell: I was only using it in a quotation, Sir. I would not have used that word in a straightforward, original contribution to the debate, Mr. Speaker.

Mr. Speaker: I should point out that it is not an excuse for the use of unparliamentary language to put it into the mouth of other persons. It should not be heard here.

Mr. Pannell: I am sorry about that, Mr. Speaker. I bow to your Ruling, but I heard yesterday an hon. Member in


this House refer to something as a bastard Bill. It is difficult to know where Parliamentary language stops and the other goes on. These are the sort of difficulties that one gets into. The adjective to which I was referring was meant to indicate the ultimate contempt that the experts had for the Volkswagen.
I have a letter here on the question of the Volkswagen. This was written by a quite responsible person, as the Minister will recognise. He said:
You will forgive my repeating what I told you: that British cars also have, all too often, vexing little faults during their first 500 miles, which destroy American readiness to keep or buy our products. In this regard, Americans contrast the sturdiness, speed for long trips (70 m.p.h.) and freedom from faults of the Volkswagen with our cars; to the disadvantage of the latter. I can assure you that this is the principal reason for which the German car is going up, and our cars down, in popularity.
I have referred to this before. The Minister will know that there is an essential difference in design between the Volkswagen and the cars that we are pushing. The Volkswagen has an air-cooled engine, which is completely reliable. It is curious that 70 m.p.h. can be reached on the Volkswagen, with the driver's foot flat on the board, and the engine not even being used to capacity. The driver cannot knock the guts out of the Volkswagen.
This car is suitable for all the vagaries of the American climate. The Volkswagen is what the Americans want. They use it as a secondary car, for "junior", or as a station wagon. We cannot export cars to America as first cars. America makes cars which are as long as the Treasury Bench and have bumpers on them like atomic warheads. We could not get such cars on our roads. It is no use piling our first cars on to the American market; the Americans build their cars for American roads. We must try to produce secondary cars for them. It is no use thinking that the cars we make here as first cars will sell in America simply because we stick a coat of arms on them.
Britain offers 26 makes of car in the United States, Germany 6, and France 5. Some of the questions which might be asked in the inquiry which has been proposed are: (1) Can we provide widespread and sufficient maintenance and

spare parts? (2) Should we eliminate all but six or ten makes of car? I am not arguing the idea of nationalisation but of rationalisation within the industry, where we wish to maintain that full employment which is the objective of both Government and Opposition in domestic politics. (3) Should we form an export corporation which, of its own experience, will place orders only for the makes of car that it can sell? I found only seven cars of one particular type in the whole of the United States.
We might try to accustom the Americans to the idea that British cars can be serviced without difficulty throughout that vast land, as the Volkswagen organisation has already achieved. What has been said about Volkswagen's setting up their agency before they started to export is true, not only in regard to America, but in Africa as well. I got figures last night—they are not very convincing—about Ghana, which will become self-governing within about a fortnight from now. Self-governing territories show a tendency to be independent in their imports and to look to foreign makers. There is no paternalism to hold their loyalty to us. We have to sell our cars there, so we should study the needs of the market in Ghana, when they control their own currency. I mention this because the subject is topical, and because I have been out there.
If the British car cannot be sold in certain parts of the world, the fact-finding inquiry which we are proposing might decide what we ought to try to sell. One answer might be, "tractors". Competition against British tractors is not so keen as with cars. The British tractor is among the best in the world, and that may be the most hopeful market of all.
This brings me to the question of East-West trade and of the strategic list. Can we sell motor cars in the East? We cannot even sell Land Rovers. The Chinese peasants do not want Austin Sevens. I am sure that the Minister must have found that when, as an engineer, he has been speaking to bureaucrats, it has been difficult to reach their level on occasions, and make them understand. That was my experience in 1950, when I could not make them understand why electric vehicles should not have high Purchase Tax. If they have made progress since that date, I am very glad. We have also


to go into the general question whether taxation policy is bedevilling the situation. Are there such situations as, "We cannot use petrol, that is taxed, so we have to use paraffin, which is not taxed."? That, also, should be the subject of inquiry.
The inquiry we envisage would be one of the most important that we could undertake. The other day the Prime Minister announced the probable appointment of a Royal Commission to look into the question of the remuneration of doctors. That reminded me not of "Harold Mac", but of a previous Prime Minister, "Ramsay Mac", who used to believe that a commission a day kept a crisis away. The inquiry we ask for is rather more important than that concerned with doctors' remuneration; it is whether this nation shall live or die. We need an objective analysis of this great motor car industry, and the Government are the best people to do it.
In the long term, a Government inquiry will be for the welfare of the people as a whole, as well as for the members of my trade union, of which I have been a member now for thirty-eight years. I hope that it will put the industry on a firm and sure foundation, and not let it remain the victim of the present hit-or-miss mentality. We must take as our guide for policy the good old engineering slogan that the test of the job is always, "Will it work?"

12.48 p.m.

Mr. William Shepherd: I apologise to the hon. Member for Rugby (Mr. J. Johnson) for not being here during his opening speech. I assure him that I started work quite early this morning but I could not finish it in time to be here.
I have listened to speeches from the other side of the House and I sympathise with the views of those who have spoken on redundancy. Perhaps we have not penetrated very deeply into the problems of the motor car industry in the speeches which we have so far heard. There might be a case for getting more knowledge on this issue, but there is not really a case for a public inquiry—

Mr. C. Pannell: It need not be public.

Mr. Shepherd: Well, not necessarily public, but a Government inquiry. A good deal of information is already available

for those who seek it. I will try to put forward my idea of the general condition of the industry and of what we might do to seek an improvement of it.
The change in the industry is an example to everybody who may wonder why we cannot keep things static. Day after day, Members have complained that this or that industry is affected and have wanted the Government to do something about it. The truth is that the country depends largely upon its export trade, and that we have to follow trends or die. We cannot be like Canute and try to hold up progress. That is the lesson of the last ten years in the motor car industry. I am not a pessimist about the industry. It has had a fairly substantial reverse, but there are many things on the credit side with which I hope to deal.
Since the end of the war, as we all know, the motor car industry has had an exceedingly rapid growth. It has experienced a very heavy demand. All over the world its products have been demanded, and the industry has been working full out to maintain production. Without any doubt it has had a very remarkable record of export achievement. I think that we ought to pay credit to the industry for what it has done. A short time ago most people were anxious to praise the industry, but now it attracts a horde of critics, some of whom are very carping and many of whom do not realise the difficulties which it has to face.
As an estimate of the problem at present, I should say that many of the shortcomings of the industry can be traced to the evil of excess of demand over supply. Sometimes when we on this side of the House try to point out to hon. Members opposite that an excess of demand over supply is not an ideal state for the economy, they are very hesitant to accept our view, in fact they are very critical of it, but most of the problems which face the industry today are the result of an excess of demand over supply.
That was borne out by the speech of the hon. Lady the Member for Coventry, South (Miss Burton), who said that when the unemployed workers of the motor car industry tried to find jobs with other firms they were met with a demand to state their qualifications, which they considered unreasonable. I shall tell the


hon. Lady why that is. The workers—semi-skilled and almost unskilled workers—were getting wages in the motor car industry higher than tool makers were getting in outside trades. When they went to other factories and said, "We want £15 or £16 a week," the employers very rightly wanted to know their qualifications. That is an example of what has been happening in the industry and why there has been a rude awakening for many of the workers, as well as for the employers who thought that the post-war situation could go on for ever.
Much has been said about redundancy, but there was redundancy in this industry long before the recession came. In one factory, to my knowledge, more than 1,000 surplus men were carried over a long period. They were not wanted, but because there was such a shortage of labour the management said they would keep them on so that when they increased production in six months or twelve months time they could use that reserve of labour. That kind of thing prevailed in the industry long before the recession came.
The third effect of over-demand in relation to production has been in respect of quality. British cars have an unenviable reputation for quality because in respect of relatively small things supervision has not been possible. If one takes into the industry almost every kind of man one can get, the maintenance of quality becomes, if not impossible, very difficult. So, as a result of excessive demand over production possibilities, we have had a series of conditions which I think have militated against the industry.
Another matter with which we should deal is the difficulty of getting new blood into the industry. After the First World War a host of new people came into the industry. There were 30 or 40 new makers who began car production. Many of them fell by the wayside, but some survived, and some are great and famous names in the industry today. After the last war it became virtually impossible for newcomers to enter the business. In the first place, it was impossible because large-scale production of a new model entails an expenditure of anything between £5 million and £10 million, which is a great deal of money that certainly

cannot be found by a newcomer without capital behind him.
Secondly, it has been almost impossible for new firms to get into the business and establish production because they could not obtain components. Manufacturers of new small cars could not get gear boxes, back axles and even bodies because the demand was up to the limit and old customers naturally got priority. As a result of the excess of demand over supply, the industry faced a series of difficulties which now are reflected in the reverse which it is suffering in overseas markets.
There have been many complaints by hon. Members opposite about what we can and cannot do. It would be as well if we made clear what we can and cannot do. In the first place, we cannot compete with Americans in big car manufacture. That is obvious; it is out of our range altogether. We have not yet succeeded in competing with Europe in very small car manufacture. We are established and I think we are well respected in the medium car market and in the specialist car market, while in the sports car market we have a very high reputation indeed.
The progress which we have to make is clearly in the smaller car market, because under world conditions of high-cost petrol and its scarcity under present circumstances, the increasing demand is for the smaller car. On the Continent of Europe, where we hope soon to have some access, there is a market for 60 per cent. of the world's smaller cars. That is a prospect which we can face with some feeling of satisfaction. Although I say that we have not succeeded with the small car, I should qualify that statement. We have produced what I think is the best small car made since the war—the Morris Minor. It is true that it is badly in need of being rebodied now and looks antiquated. Nevertheless, I think that it is the finest all-round small car produced. There is still the need for a smaller car for the European market and to develop a new market at home.
Reference has been made to the Volkswagen. It is interesting to realise that the Volkswagen was first designed by an Englishman who went out to the N.S.U. factory—which then was a motor cycle manufacturing unit—and produced the


plans, but could not get it produced at that time. Later it was taken up by Dr. Porsche and developed as the car we know today.
The Volkswagen is a very old-fashioned motor car, designed very long ago. I do not think it is a very distinguished car. The steering is bad and the back seat accommodation is much more uncomfortable than the Jaguar, to which reference has been made. It is hot and uncomfortable in the summer—[Interruption.] If one sits in the back seat, as I have done for long periods when driving in Germany, one appreciates that that is so. The Volkswagen has many characteristics which do not commend it to me. Anyone in this country who buys a Volkswagen rather than a Morris Minor qualifies for medical attention.

Mr. C. Pannell: Of course the Morris Minor is made for the British market and is made superlatively well. If anyone bought a Volkswagen to drive here he should have his head tested, but the fact is that we are not producing cars that the suitable for use in the American climate.

Mr. Shepherd: I was coming to that point, but I wanted to point out that we are not without advantages and merits, and that the Morris Minor is a distinguished production which deserves more credit than it has had. The Volkswagen, I think, is often lauded unnecessarily. The Volkswagen has its merits in that it is a robust machine which can be run for 60,000 or 70,000 miles without a major overhaul. Some of our cars can do that if they are carefully handled, but the Volkswagen has that merit even if it is not carefully handled.
Its second advantage is that it has very good finish. I think that we must pay much more attention to finish than we have been inclined to pay in the past four or five years. As hon. Members know, in general we employ not the cellulose finish but the synthetic lacquer finish. It requires less work in rubbing down between coats and therefore is cheaper, but it gives what is known as an orange-peel finish, and that is not very attractive to overseas buyers. Indeed, it is not very attractive to buyers in this country.
I have said that the field in which we can progress in motor car manufacture

is that of the small car, more robust, with better finish and with better design. May I say a few words about design, and particularly about suspension design? The English motor car manufacturers are today running round the Midlands in hordes testing out new suspensions. They ought to have been doing that a very long time ago, but because they had an excess of demand over supply and because it costs so much money to produce a new vehicle, they were content to continue with the old suspension. With their resources they should have developed new small cars, even if they could not put them into production. The development work ought to have been done years and years ago, and there is no excusing them on that account.
The question of suspension is not merely one of preference; it is of vital importance in this battle for the Continental market. Continental drivers drive their cars very differently from the way we do. The Italians, the French and the Germans have different methods of driving from the British. Hon. Members may say that the Italians and the French are mad and the Germans are bad, but they drive their cars in the way they want to drive them, and if we are to sell cars, we must offer them cars which they can drive in that way. If a driver has all-wheel, independent suspension he gets better adhesion on a bad surface and on a cobbled surface; there is a very much increased adhesion compared with the fixed suspension at the back which we use.
We cannot say to the Continental driver who wishes to drive within an ace of breaking his neck at almost every corner, "You should not drive in that way". We cannot say to him, "This is not the way to drive a motor car". The Continental driver does not want to be told the way to drive his motor car; he wants to buy a car in which he can go as near as possible to breaking his neck without actually breaking it. If he drives a British car on the bends and on the cobblestones as he would drive his own car, lie faces certain death; and naturally, therefore, he does not want to buy our motor cars.
The motor car manufacturers are apt to pooh-pooh all these things, but I say to them that suspension and the adhesion


which one gets from this all-wheel independent suspension is of vital importance to Continental markets, and we must produce that sort of motor car.
The second step which we must take is to do something more drastic about standardisation. At the end of the war I keenly desired the Ministry of Supply to effect more standardisation in the British motor car industry, because under-the-bonnet standardisation in America has enabled the Americans to produce cars per lb., or perhaps I should say per yard, more cheaply than anywhere else in the world. We were getting somewhere in respect of standardisation in this country, but I am afraid that in the last year or so we have moved away from it.
I should like to hear from the Parliamentary Secretary what has been done in the last couple of years to try to get the motor car manufacturers on the straight road to standardisation. I know that we do not want standardised car bodies. I am referring to under-the-bonnet standardisation. I am sure that that is a field which has by no means been fully explored, and I hope that my right hon. Friend will be able to tell us that as a result of the setbacks of the last eighteen months we shall pursue the policy of standardisation with much more vigour.
I want to direct the attention of the House to a third point in relation to which I think we are failing and about which something might be done. It concerns the structure and organisation of British motor car companies. We have a difficulty in the United Kingdom which is brought about by the battle between the British and American elements. It is unfortunate, because the Americans have enormous resources, and the English children have a great advantage in their American parents. A very hot pace has been set. In fact, I would say that too hot a pace has been set. I say that because, as a result of competition between the American and the British elements, we have had what has been a reckless programme of expansion. I do not like saying this, but the obvious difficulty has been that there has been no co-ordination between the firms in the industry on what was to be the measure of overall expansion.
When I made some inquiries a few years ago about the extent to which various companies in the industry had

consulted each other before they embarked on these expansion plans, I was horrified to find that they had not consulted each other at all. We in this House, very properly, do not want to see restrictions, and we have done a lot recently to try to prevent them in our industries. We may therefore be regarded as being somewhat carping when we make this complaint. Nevertheless, I feel that in an industry where so much capital expenditure is necessary for development—capital expenditure which conflicts with our very real needs in other industries—at all events some measure of co-ordination in development ought to be instituted. I think that at the very minimum the various companies ought to discuss with each other their development plans, try to assess the measure of future demand and in some way try to relate their expansion to it.

Mr. Chapman: I have been saying that for two years.

Mr. Shepherd: I want to refer to another point in connection with the structure and organisation of the industry. The industry today is in a somewhat difficult state because it has developed very, very rapidly. In many respects a very unsatisfactory state of industrial organisation exists in the industry.
A friend of mine, with whom I often discussed the motor industry some years ago, used to say to me, "Every one of the people who run the motor industry is an adjectival prima donna." It is true that the motor car industry has a history of bold, adventurous and dominant individuals who built up great businesses in the inter-war years. What we are suffering from now is that we have not developed the organisational structure to take the industry from those days, when it was sufficient to have that dominant individual at the top, to the larger-scale organisation which is necessary for the conduct of these modern businesses.
Perhaps I may give one example to prove this. In one of our largest corporations we have had for some time, and may even have today, although I have not checked this, one man who is both chairman and managing director. It is quite impossible in the corporation of which I am thinking for one man


fully and satisfactorily to carry out both those duties. He cannot carry out the duty of being both managing director and chairman of a vast corporation in an industry like the motor industry, with long-term considerations to bear in mind. Somebody ought to be thinking about the long-term considerations at a high level, and the managing director ought not to be saddled with the job of being chairman at the same time. I think we have certainly not reorganised the structure of our companies to meet the increase in their size and the new problems which have arisen.
The second thing that I think we ought to have inside the companies is the elevation of the status of the higher executives. I do not know whether or not it is a provincial outlook—and, as a provincial, I shall not say too much about provincialism—but I am struck by the fact that in the British motor industry, the chief designers and higher executives are not really accorded any—or very little—status at all. It is true that they get better salaries than they formerly did, but their status is still very poor.
I take as an example the man who has designed the most successful engine in the years since the end of the war—the Jaguar engine. I doubt whether one person in 10,000 in this country knows his name. I assure you, Mr. Deputy-Speaker, that if he were a Continental his name would be blazoned from one end of the Continent to the other, and he would be known as a man of distinction.
It seems to me that these men, who do these jobs so magnificently and so well, are not given the status in the industry that they ought to have, and I hope that those responsible for running our motor car companies will realise that a little glamour attached to the job is of very great consequence in getting the right sort of men, and the right sort of continuity of men.
I have said that I do not despair of this industry. It has had a reverse, and a substantial one, but that has been due to errors of over-enthusiasm and over-optimism. It is due to the fact that nothing is quite so dangerous as success, and a really great success is much more dangerous than ordinary success. The motor car industry has suffered from great success in the post-war years.
Nevertheless, we have the people to do the job. I do not think that we can complain of our designers and technicians. Until very recently, when General Motors started spending about £4 million a year on research and development, it was true that almost every development in automobile enginering was pioneered in our British factories. We have the men, the engineers, and the designers; it is a question of seeing that they do the right job.
Moreover, we have the right set-up here. One of the consequences of this large expansion has been that our motor car industry has put down very fine plant. By and large, we have the best set-up in Europe in that respect. No other country in Europe has engineering production facilities to compare with those in the United Kingdom. As I disputed with the hon. Member for Northfield (Mr. Chapman), I think that the British motor industry's set-up is the best.

Mr. Chapman: I was not disagreeing with the hon. Member about the mechanical and engineering set-up—I agree that it is the best in Europe—but he was, at that time, being rather wider in his implications.

Mr. Shepherd: I am sorry that we misunderstood each other.
It is true to say that, by and large, our engineering set-up is of the highest order, and if we really get down to it, we can show all Europe and the world what we can do in the way of motor car production when we have the chance. We shall not do any good by trying to get outside that sphere.
Moreover, it should be stressed that we have the lowest labour costs in Europe. I think that I have already said that in the motor industry unskilled men have been paid too much for the job, but despite that, because of the extent to which we have been able to improve our production capacity and our engineering set-up, our labour costs are the lowest in Europe.

Mr. Edelman: May I ask the hon. Member whether he has studied the comparable labour cost figures at the Renault works in France? There, automation and the rate of wage, although resulting in a total gross wage for the worker which


is relatively high, has produced a lower rate relative to the Continent, and considerably lower than ours.

Mr. Shepherd: I think that, in certain respects, the Renault works beats us on automation, but I do not think that it can be generally said that it has a better set-up than, say, B.M.C. However, I would warn the hon. Gentleman against falling into a trap in regard to wage rates. It is true that the wage rate in France is probably about 30 per cent. lower than ours, but what hon. Gentlemen must not forget, and what British industry and hon. Gentlemen are continually forgetting, is that that is not the whole of the story.
In France, there is a social security payment by the employer which represents about 50 per cent. of the wages bill. Hon. Members must not talk as if there were an advantage in this matter lying with our Continental competitors. When one adds to the cost of the motor car manufacture in Europe a 50 per cent. social security cost, one finds that the advantage still lies, roughly, with us. In Germany, the social security payments situation is not very different—maybe 35 per cent. In Italy, I believe it is higher than in France. In this country, our social security payments, though largely made up of tax, represent not much more than 20 per cent. of our costs.
We must not be pessimistic here. If we can do the right sort of job we can beat the whole world in motor car manufacture, because we have the right men as designers and technicians; we have a first-class mechanical and engineering set-up, and a wage cost which is definitely favourable to us, with our efficient production capacity.

Mr. Robert Edwards: And the wrong Government.

Mr. Shepherd: I do not think that this is the occasion for party politics. The problem has gone beyond those trivialities.
We can do this job. We have the tools for the job. Moreover, we have, overseas, the value of Imperial Preference. We have nothing to fear, provided that we take off our coats and do the job.
What does it mean? First, we have to give the best possible service to overseas

customers. We have to reduce the number of models which we produce for the overseas market. We have to concentrate our energies on meeting the overseas demand—particularly on the Continent—for a smaller car, a car which has all-round independent suspension; not necessarily an air-cooled engine—I would not be dogmatic—but with some novelty appeal, and very low cost in terms of petrol consumption.
We can produce that car more cheaply than can any country in Europe, if we get down to it. We have to make sure that in all our factories there is absolute efficiency. We cannot look any more to employers keeping on a thousand men because they will be, or may be, needed in six or twelve months' time. We cannot pay the semi-skilled man a higher wage than that of the first-class tool maker in allied industries. We want to get rid of all the froth that has arisen during ten years of post-war demand.
If we do that we can show the world, because I know that we have the right men and the right tools for the job. If we realise that we have done some things that have been wrong and face the realities of our present position, plan what we are to do in terms of tackling new markets, I am confident that our motor car industry will continue to serve us well.

1.19 p.m.

Mr. Donald Chapman: I am delighted to follow the hon. Member for Cheadle (Mr. Shepherd). As so often before, I am in such broad agreement with what he says that if it were not the kiss of death for him I would say that I wish that he were on the Treasury Bench, because then we should have in these debates a much more enlightened reply than we usually receive from the Government.
This is one of a number of debates that we have had during eighteen months about the situation in the motor car industry. I want to follow the hon. Member for Cheadle in dealing mainly with the problem of the smaller mass-produced car. What I have to say does not really concern the luxury or sport class, which is a matter quite on its own.
There is some agreement on both sides of the House about several things and I want to say what that agreement is first I think that we are very unhappy about


the state of the industry. It gives me no pleasure at all to record that last year output in this country was down by 15 to 20 per cent., and exports were down by a similar figure. It dispirits me to record that in January of this year—a terrible start for the year—output was down 42 per cent., and commercial vehicle exports, which have been the only bright picture in the whole unhappy story of the last couple of years, were down no less than 46 per cent., which is a really terrible thing to happen.
When we look at what is happening to our Continental competitors, it is not pleasant to have to record that while our output has gone down 15, 20 and 40 per cent., German production in January was up 22 per cent. on December, that they took the lead from us last year, and that in Italy, which we never thought of as a world producer of cars, production last year went up by 17½ per cent. and exports went up by 16½ per cent.
These are not palatable facts to us in Britain. If the hon. Member for Cheadle is right in saying what a wonderful industry we have got, we want to know what the dickens is happening to it, if these sorts of figures are happening day after day, frightening the lives out of many people who look to this industry for their living.
I want to say something about Volkswagen production. I was so frightened about the situation that I spent sonic days at the Volkswagen factory, talking to some of the executives there. It is not palatable to me to have to record that although the Volkswagen sells for £750 in this country, still more of them could be sold here, while we have a British equivalent which we cannot sell at £400, £500 or £600.
These things have to be faced. It is no good the hon. Member for Cheadle waving his flag, and saying how wonderful the industry is, if the achievement of that industry does not match the grand words with which he describes it.
Another matter on which the House will not be happy is the human side of what has been happening in the last twelve months. A large number of men in my constituency have had to change their jobs, and suffer great hardship in the process. I have made it my job to follow up what has happened to some of them. I have been to visit some of

them in their homes, to discuss their change in fortune.
Let me give one example of the kind of thing I found. A man earning £14 to £16 a week on the production line went to six factories looking for an engineering job. He was, I would say, a little more than semi-skilled. At one place he was offered a job at £7 5s. a week. At all the rest of them the general tale was, "Oh, are you from Austins? We are not interested then. Austins had enough trouble with the Austin blokes, so we do not want them here."
This man tramped round the streets, and finally, just before the lists closed, he dashed in and got a job on the Birmingham City transport. I say "just before the lists closed," because they had so many of these men after jobs that they could not take them all. This man, who is earning £14 to £16 a week, is now working 63£ hours a week to earn £11 18s. To get £15 9s. one week he worked 83 hours. The reason he had to do that was that he had brought his family and his whole way of life up to a certain standard of living. He had taken on commitments in hire purchase, and so forth, which he could not easily cast aside.
This is the toll of human tragedy that has come with this decline in fortunes in the motor car industry and the deliberate contraction of it by the Government. Before I go any further, I want to register that single point with the hon. Member for Cheadle. He slides over far too many of these facts. There is a terrible toll of human unhappiness which has accompanied what he calls the dip in its fortunes in the last twelve months.
The second point on which we are agreed, I think, is that possibly the industry has over-expanded. Whether it was due to the over-optimism of the era of the Lord Privy Seal—I am sure that had a large part to play in it during the period when we were told that all the problems facing Britain had been solved—or whether it was due, as the hon. Member for Cheadle said, to the fact that there was no consultation between motor car manufacturers about their development plans, I do not think it matters very much. I am sure that both have an element of truth in them. I think it is true that we probably over-expanded.
Another matter on which I am sure we would all agree in all quarters of the House is that while we expected this growth in foreign competition, we did not expect that it would "knock us for six." I am tired of going to the motor car manufacturers and to the Government and hearing them say, "Oh well, we had it easy in the markets at the end of the war, and we expect our foreign competitors, once they get going, to catch us up." So they have, but we did not expect them to "knock us for six," which is what is happening the world over.
The hon. Member for Cheadle is optimistic about the state of the industry, but I think we shall agree in not being over-optimistic about the medium-term future of the industry. Reference has been made to the situation in South-East Asia, where Australia, New Zealand and the area generally have taken 40 per cent. of our exports, but are now producing their own cars. In some ways this is like the cotton industry. A newly-developing nation begins to industrialise, and then hits at what was once one of our staple exports and does the job for itself.
In Australia, the motor car industry is now the biggest employer of industrial labour. It is quite a frightening thought when we reflect upon how much we depend upon it. General Motors, which dominates the Holden firm, has expansion plans amounting to £l7½ million. The British Motor Corporation will soon be producing 50,000 cars a year from its own factory. Chrysler's are to be in production there next year. Volkswagen, which had nothing, increased to nearly 6 per cent. last year in its share of the Australian market, and this year it is to be higher.
What hope have we in these markets, based on this present trend in the figures, when we consider, further, that the Holden Corporation and others are to export to the whole of South-East Asia as well, taking away from us not only the home market of Australia but the South-East Asian market generally? We should not be over-optimistic about the medium-term future. I and the hon. Member for Cheadle are in agreement on this, I think—I say it with some hesitation to my friends in the motor car

industry—that we must be quite firm about consumption levels at home. We really cannot envisage going back to the rip-roaring consumption of motor cars on the home market. My target is a surplus of £350 million in our balance of payments, and that we simply will not reach unless we are willing to tighten our belts and limit any increase of consumption at home quite considerably, saying to the motor car industry that if it has any hope of importing steel in order to sell cars on the home market it had better think again. I am sure that I carry a large number of hon. Members opposite with me in that. We must be tough about consumption levels on the home market and about the need to concentrate on exports.
I think we have agreement thus far between the two sides of the House on the state of the industry as it exists at this moment. Summarising the heads of our agreement, we are unhappy at the state of the industry, and we think it has been over-expanded. We are sorry about the human problems which have been thrown up by its contraction. We are not optimistic about the medium-term future in exports, and we certainly are not going to encourage the industry to be optimistic about future home sales: there is no prospect of increasing, them at the rate the industry wants.
Before I come to what I believe to be the real justification for the inquiry for which we ask, I will interpose a few words about the Volkswagen. As I said earlier, I was so alarmed by what was happening that I went to Germany to see the Volkswagen people for myself, and I had what were for me perhaps the four most instructive days of 1956. In my view, the phenomenal success of Volkswagen is due to something which has not been mentioned today. Even the hon. Member for Cheadle overlooked it.
The success of Volkswagen is based on producing one car and saying that it will not change and that there is no prospect in the immediate future of any major modification in body, engine or anything else. The result is that traders the world over are willing to carry spares because they will not be out-dated. Moreover, the public will always buy the Volkswagen car because people says to themselves that it has now been perfected to this level after a number of years and


there is little likelihood of their discovering great flaws in it.
If I may say so, the contrast with the British industry lies in this: that by the time a British manufacturer has cured the faults in a current model, a new model is due, so that nobody knows where he is. Furthermore, by sticking to one model the manufacturer ensures that the resale price stays up. Every time a new model of a British car comes out, the value of an old model drops by 20 per cent.; but because the Volkswagen goes on for ever and ever the second-hand price stays up.
This is an enormous attraction to people who buy the Volkswagen as a family car, because they know that they will be able to sell it in a year or two for very little less than they gave for it, knowing that a new model will not have knocked down its price. I am sure that that is the primary reason for the Volkswagen company's success, and Dr. Nordhoff, the great man who runs Volkswagen, assured me that it was a most important factor in his sales.
The next important point in the sucess of Volkswagen lies in the high ratio of planning and technical staff to the total labour force. I am sorry to keep referring to the speech of the hon. Member for Cheadle, but I did agree with so much of what he said, and I should like to emphasise this particular aspect of the problem, to which he did make some reference. In our industry, we have what I might call the "tycoon atmosphere", based on earlier days of success, still continuing. As far as I can see, we tend to get too many of the favourites of the big tycoon running the immediate show.
In German industry, that is not so. In Volkswagen, a high degree of training is planned for all members of the technical staff; they have very high responsibilities, and there is a large number of them compared with the situation in British motor car companies. The result is that over every single stage of the Volkswagen production, sales, after-sales service, and all the rest, there is nothing whatever "hit-and-miss" about the organisation. The company has the technicians and the managerial staff to sec that that does not happen.
The third reason for the success at Volkswagen is inspection. One hon.
Member has already said that one of our troubles is flaws. One does not find flaws to any great degree of Volkswagen cars. I would say this to the Parliamentary Secretary, who, I think, does not really believe this, that in my own town, Brighton, not so very long ago a man had a British car on which the chromium plating peeled off the bumper bar. It took him several months of argument with the manufacturer to get satisfaction.
Another man had the same thing happen on a Volkswagen. He drove it to the Volkswagen distributor, who said, "We never argue about these things; we believe they are too important for the reputation of our production". He brought over a mechanic, the thing was changed, and the man drove out of the garage some minutes later with a new bumper bar, at no cost to him. This sort of thing matters greatly, and our manufacturers have not even caught up with the idea yet.
The fourth factor in the success of Volkswagen is after-sales service. I want to warn the Parliamentary Secretary that the Volkswagen company is being pressed to expand its sales into countries where it does not at present sell. I merely say, heaven help us when it starts. Dr. Nordhoff told me personally that he will not do it for this reason, that he does not start selling in any country until he has got the network of garages and traders with spares and after-sale service established. If Volkswagen starts to do that in some of the countries where our products are now supreme, then I am afraid that we shall take a harder knock than we have already suffered from Volkswagen elsewhere.
Other factors have been mentioned. Design is one of them. I will not go over that again, as other lion. Members have covered the matter already. The hon. Member for Cheadle referred to the air-cooled engine and independent suspension, and he was absolutely right about that. Another factor is the lack of complication in the engine itself.
Lastly, a factor which has not been mentioned at all is the spirit in the Volkswagen industry. When I was in Germany I found it exhilarating to hear people talk of "Our Volkswagen", "Our car", "Our Dr. Nordhoff". I was very impressed to feel that here I was visiting


a joint enterprise of workers and managers, where there was a spirit of partnership such as I have never seen or even smelt in the British motor car industry. One of the tragedies of our industry has been the bitterness of human relations within it.
Herein lies the great difference at Volkswagen. I forget the exact figure, but about 80 per cent. of the workers there have been trained after coming as refugees from the East, and now they have become part of the community, feeling the spirit of partnership. These things make a great difference, when all is said and done. Workers like that do not let their products go out of the factory without the stamp of absolute quality being impressed upon them.
With so much agreement between both sides, as I have said, and with these startling lessons from Volkswagen before us, I am sure that we ought to be able to get agreement of what the Government should do next. I am afraid we part company here, but I will say what I believe they ought to do. First, my people in the industry have every right to know whether the Government think that the disinflation, the contraction, of the industry has gone far enough. It is most unfair that we should leave an industry, employing so many people, in complete ignorance of the Government's views about it. The man to whom I referred, and who is in so much trouble through being displaced, is now working 83 hours a week to get the same wage as he earned at the Austin works. Such people are bearing the brunt of the Government's decision, yet we still do not know and the Government will not tell us whether the disinflationary pressure on the industry has gone far enough.
Secondly, we do not think that disinflating by monetary measures is sufficiently effective in itself. Here we come to the need for an inquiry. I want to see a full-blooded inquiry, but if we cannot get such an inquiry I ask the Parliamentary Secretary to the Board of Trade to see that there is an inquiry inside his own Department. From what we have seen, there is an abysmal lack of knowledge about the industry in both the Treasury and the Board of Trade. I say that advisedly, because I have had much to do with the subject in the last

few years. The answer from the Minister of Labour and from the President of the Board of Trade has been that they do not produce cars and that they have to leave it to the motor car manufacturers.
That is not good enough. It is not good enough for the simplest of reasons, and I hope that the Parliamentary Secretary will agree with me to this extent. What the Government decide about credit restrictions and financial policy and anything else has such an effect on an industry of this size that it is quite wrong for the Government to make ad hoc decisions from time to time. Those decisions should be purposive, they should be intelligible, and they should be understood by the industry.
They ought to be—and this is the crucial point—ahead of events and not always behind events. Our great grumble has been that the Government have said one minute that they do not produce motor cars and yet, the next, have altered the whole complexion of the situation in which someone has to produce motor cars. Decisions should be more purposive, intelligent and intelligible when they have so much to do with the fortunes of the industry.
We may be asked what such an inquiry could do. It is not correct to say that such an inquiry could not do much. There is a notable firm, Joseph Sebag and Co., big merchant bankers and a big Stock Exchange firm, which produced its own inquiry into the motor car industry and which has answered all the questions which the Government tell us they cannot answer. The inquiry tried to assess the likely size of the future home market. It was found that it costs at least £110 a year to run a car, so that it is very unlikely that people earning less than £750 a year will be able to run a car.
That is some indication about who will buy cars in the future. It does not give us the numbers, but it does show that the estimates of motor car manufacturers, as shown by their development plans, are totally unrealistic. The industry plans to produce half a million more cars a year from about 1958 or 1959 in addition to the million a year now produced. Nobody pretends that if we are to have a real battle to get a balance of payments surplus, home consumption will increase by that amount, that we will have half a


million more people coming into that real income bracket every year over the next few years.
That is the crucial issue facing the industry. If we are to take off our coats and fight this battle of the balance of payments crisis, the car manufacturers must say "Goodbye" to the hopes of selling half a million extra cars on the home market every year. At least, a Government inquiry could start working out whether I am right, or whether these rough figures which we have been giving to the industry are wrong.
Thirdly, we could make similar calculations about overseas markets. I have already mentioned what is happening in Australia and South-East Asia. It is not difficult to foresee what is likely to happen in those export markets. An inquiry could pinpoint what these huge sales on the home front will mean in terms of imported sheet steel. We should frankly tell the industry that it cannot hope for that amount of steel, and that it must plan its size accordingly.
Fourthly, we want an attempt made to find out what is likely to happen when we have the European Free Trade Area. I am not all that optimistic about the prospects of the motor car industry when the 30 per cent. duty on cars coming into this country is removed. The Volkswagen already sells at £750 when its British equivalent is £500. I do not know what will happen when the duty on Volkswagen cars is removed.
Lastly, we have to have this inquiry into the sort of things about which I have been talking—after-sales service, the ratio of planning and technical staff to workers in the industry, the industrial spirit of the industry, the problem of sales of commercial vehicles, and possible East-West trade. There is a case for something, as I have said on previous occasions, which would be half-way between what the Government believe and what we believe, that is to say, not wholesale planning and steel allocation, but an independent statement of facts as a guide to the industry about what its future is likely to be.
I am sure that that is a half-way house which the Government can happily accept. It would stop this wandering about in darkness for motor car manufacturers and workers in constituencies like mine,

and would bring out many facts which need to be known by people outside as well as inside the industry.
I hope that the Parliamentary Secretary will not say that the Government expect the things will pick up this autumn. Frankly, I expect that they will pick up this autumn. The reason is that by the autumn about two years' pent-up demand for motor cars will begin to express itself. From credit restrictions and hire-purchase restrictions there will be about one and a half years' pent-up demand; and another half a year's demand from those people who have stopped buying cars because of the petrol shortage.
I fully expect that the factories in the motor car industry will be working at almost full-time again in the autumn. Nevertheless, if the Parliamentary Secretary rests his case on that, he will be a little dishonest. Even if that happens, it is the longer and medium-term problems of the industry to which we are desperate to have an answer. Those problems will remain. They will reappear once the autumn has passed and the pent-up demand has been satisfied. They will certainly reappear so long as the Government have the courage to seek a real surplus in our balance of payments.
It would be more honest to say that the Government agree that the medium-term outlook for the industry is not rosy and that we should have an inquiry, an intra-Government inquiry, or perhaps even an independent inquiry, about the sort of things which I and my colleagues have been saying about the industry.

1.50 p.m.

Mr. Maurice Edelman: This has been an interesting and important, if somewhat discursive, debate. I only regret that there have not been more hon. Members opposite to take part in it. The debate is not concerned merely with the challenge by the Opposition to Government policies; it concerns a matter which calls for constructive thinking. I very much regret that throughout the debate we have had the support of only one Conservative back bencher.
My only qualification for speaking is that I have observed at fairly close quarters the rise and decline of the motor industry in Coventry. During the period of eleven years in which I have been


associated in some measure with the industry, I have come to one firm conclusion, namely, that the nature of the industry is such that the only thing which will make it really efficient and able to compete with manufacturers abroad is nationalisation. It is interesting and significant that the examples quoted by my hon. Friend the Member for Northfield (Mr. Chapman) of the Volkswagen, and of the Régle Nationale de Renault seem to show that more efficiency, higher productivity and happier social relations exist in factories which have come under national and public control.
I should like to refer to the history of the motor industry during the post-war period. The Minister will recall the great clamour of motor manufacturers for what they called freedom. What they wanted was the right to sell whatever they liked on the home market, and to determine of their own accord what proportion of their output they were going to sell abroad. I recall how my hon. Friend the Member for Coventry, East (Mr. Crossman)—who is prevented by illness from being here today—and I were constantly badgered by motor car manufacturers to support the thesis that only by having an output predominantly for the home market, and thus securing what they called a buoyant home market, would they be able to produce a surplus sufficiently cheaply to capture export markets.
We resisted that thesis because Sir Stafford Cripps, with considerable prescience, recognised that in order to adjust our balance of trade favourably we should have to devote a considerable proportion of our motor car output—in which the conversion ratio is very high—to the export market. Only on that basis would it be profitable to expand the motor car industry. As a result of his pressure the industry did expand, although reluctantly, until a point was reached at which 78 per cent. of its output was going abroad. That was the heyday of the industry. We had full employment; the order books of the factories were full, and we had a prolonged period of "summer noon," when everyone imagined that the sun would never set.
Now we see very serious signs of recession—to use a mild term—and of crisis—to use a term which has been used by the Chairman of Standard Motors. The crisis is not a recent development; it began long before Suez. It began, indeed, long before the credit squeeze, and precisely for the reason that I have indicated—that motor car manufacturers, anxious to tap the easy resources of the home market, allowed their export organisations to run down, and did not put the proper emphasis on post-sales servicing and general salesmanship abroad. Raking in the easy profits of the home market, they allowed the export percentage of motor car output to decline to a point when suddenly, when we were faced at home with domestic difficulties, there was no export market of a sufficient size to keep the factories in full production.
Motor manufacturers, like aircraft manufacturers and farmers, to some extent, although they are the chief protagonists of laissez-faire, go squealing to the Government asking for subsidies and aid whenever trouble comes along. Although I recognise that a reduction in Purchase Tax might prove to be what the Americans call a "shot in the arm" for the industry. I do not see any ethical reason, and very little economic reason—apart from the wholly justifiable need to maintain full employment in the industry in the interim period—why the motor car industry should, ipso facto, have preference in the way of a reduction in Purchase Tax over any other useful industry. What is needed now is precisely the first-aid treatment which, I suggest to my hon. Friends, will not solve the inherent structural disease of the industry.

Mr. J. Johnson: It is fair to say that the Confederation in Coventry has asked only for a temporary, short-term alleviation in Purchase Tax.

Mr. Edelman: I fully support that argument, but this is all merely first aid, and when the immediate emollient has ceased to function the industry will still be suffering from the same wounds.
If something is to be done we must first discover the nature of the ailments. We can then proceed to deal with them. Without any qualification I support the intention of the Motion, namely, to set up a commission of inquiry to examine


the motor car industry and see what is wrong—and possibly what is right—with it. But that should not absolve us from our duty of examining some of the difficulties inside the industry and seeing what is wrong with it.
Only last week I was at the Renault Factory at Flins, which is about thirty miles from Paris. Having been driven along the auto road at literally 90 m.p.h. I can agree with the hon. Member for Cheadle (Mr. Shepherd) who paid a tribute to the high quality of the French motor car and the brio of the French driver. None the less, the point is that the French have developed a first-class car. Having seen the factory at work, I am obliged, with great regret, to record the fact that the standard of technical equipment at the disposal of the French today is considerably higher in quality and more modern in development than anything which we possess in Coventry, at least.
When I went over the Renault factory I was amazed to see the extent to which automation had been introduced—and introduced in a way which both lightened the labours of the workers and had their full acquiescence. I was told that 90 per cent. of the workers were unskilled or semi-skilled, and that 10 per cent. were technicians of various kinds. As I walked around that factory and saw the transfer machines; the automatic welders; the electrical punchers and many other machines working mechanically with automatic transfer arrangements, and compared them in my mind with the machines which necessitate the arduous labours which the workers in some of the more retarded motor factories in this country have to endure. I could not help feeling that what we now require is a joint effort by workers and management to recognise the menace of Continental competition and bring our own industry up to date.
I want to dwell on that point for a moment because it is no use motor manufacturers saying that the reason our exports have fallen off is that the markets are not available. The figures prove that to be untrue, and I know that the Minister will confirm it. The French, the Germans and the Italians have all increased their sales in the very large markets of Western Europe, Therefore, the markets are there. The only point

is that we are not producing either the right car or a car at the right price for those markets.
I would suggest to the Minister and to the motor car industry that unless something is done about bringing our techniques up to the level of some of the Continental car manufacturers, of which Renault is an example, our difficulties are going to multiply. The French worker receives 25 per cent. less in wages than the British worker, and although the hon. Member for Cheadle is right when he says that the social benefits are very high, the total wage enjoyed by a French worker as a direct charge to industry is lower than the total social wage of a British worker.
I want to suggest—I do not expect this from a Conservative Government, but I hope that my hon. Friends will consider the suggestion—that the time may well come when, with a Labour Government in power, it will be necessary, if the Government are willing to set up this commission of inquiry, to leap from that stage to direct action in connection with the motor industry. It may not be necessary, or even desirable, at that stage to nationalise the whole industry. But I would certainly recommend to my hon. Friends for consideration the idea of taking one significant and important factory, nationalising it and making it a pilot factory for the whole industry.
One has naturally in mind as a national candidate for such a distinction the Standard Motor Works in Coventry which has long lines of production and a large number of workers who are highly intelligent and most willing to play their part in the industry. I can say from my personal knowledge of that factory how time after time the shop stewards there have come to me or to one of my hon. Friends in order to point out certain ways in which the industry could be improved and to draw attention to certain shortcomings in production and to the urgent need to overcome them in order to make the factory better and more successful.
I believe that in such a factory we could have an example of a nationalised works setting the tenor and establishing standards, if I may use the term, for the whole industry. In that way I think that we should have a glowing example


of how it is possible in a democratic society such as ours to combine the benefits of the most advanced techniques, such as automation. We should realise that the opposition was not to automation in itself, but to the way in which it was introduced. We should see how we could combine the benefits of automation with the great social advantages which we see illustrated at the Renault and Volkswagen works. I think that would be a real "shot in the arm" for the British motor car industry and one which would stimulate it and make it take a step forward.
At the moment, grave dangers are facing the industry. For years now, and I cannot understand how it has happened, the motor car industry has been bowed down under the burden of the monopoly in the electrical equipment industry. For years the motor industry has suffered from the buccaneer jealousies of the British manufacturers who have refused to standardise because they felt that to do so would, in some way or other, impinge on their rights as individuals. They have made such a virtue of individualism that they refuse to rationalise and to standardise, and, consequently, we have in the motor industry that multiplicity of models and those relatively short lines of production which have meant an excess of competition to the point of wastefulness and the maintenance of the product at a high price.
In the natural order of things, bankruptcies, etc., we have of course seen certain amalgamations brought about by the force of events. That, clearly, is not good enough to meet the threat of competition which faces us today. I must again revert to the French example. I know France fairly well, and in the motor factories of that country we have seen a progressive reduction in the number of models produced.
The directors of firms like Citroen and Volkswagen have deliberately refused to change their models because they realised that, having got a model adapted for speed, suspension and other qualifications to their domestic and export markets, there was a virtue in consistency and no essential virtue in frequent changes.
Before I conclude, I want to say a word or two about the Common Market. I personally believe firmly and ardently in a united Europe, and I believe the proposal for a Common Market is a good one. It would remove tariff barriers and enable goods to flow freely. All that I regard as eminently desirable, but, on the other hand, I think that there would be great dangers in a Common Market under the free-for-all conception of hon. Members opposite. There should be a Common Market, but it should be a Common Market which is planned by consent and agreement. There must be planning.
The British motor industry would be mad to support the idea of the Common Market without any reference to a planned understanding with the motor manufacturers of the Continent for a division of labour, for specialisation of types, agreements on standardisation and all those other beneficial things.
My hon. Friend the Member for Coventry, South (Miss Burton) has spoken of the grave anxiety in Coventry because of the immediate drop in employment and because of the anguish of unemployment which affects so many people. My hon. Friend did that with her familiar cogency, and I will not stress the point. It would, of course, be quite easy to harrow the House by narrating the feelings of skilled men who have come to Coventry from Scotland, Wales and Ireland, and from all parts of England, with the thought that at last they had found stability, continuity and security of employment. Yet today this grave anxiety hangs over the whole City of Coventry.
I know that the Minister who is to reply to the debate has done his best and will continue to do his best in order to help the city and the workers of Coventry. I know that he is working hard to bring that about, and therefore I will acquit him personally of any lack of enthusiasm in that direction. But I find the Government guilty of weeping crocodile tears over the sorrows of Coventry when, quite apart from the shortcomings of the motor manufacturers, the Government, by their policy of credit squeeze, have deliberately created unemployment in Coventry.
I wish to emphasise that point because in the past I have challenged the present


Prime Minister, who was formerly the Chancellor of the Exchequer, with having deliberately created unemployment in Coventry. The retort of the right hon. Gentleman was that, so far from having deliberately created unemployment, he had merely loosened up the labour force in order that men could be made available to go into export industries. I suggest that that is absolutely laughable. Consider this point. The motor car industry has been the chief export industry of Britain. What logic is there, what rhyme or reason, for shaking motor workers out of their jobs to direct them into some other export industry? Clearly, there is no sense in it.
If there is hardship in Coventry today, the Government must bear direct responsibility for it. If the motor car industry has run into rough weather, the Government must bear direct responsibility, because it is the Government, in collusion with the motor manufacturers, who have suddenly disrupted the whole of the carefully planned structure of an industry which was the pride of our country only a few years ago when it was being directed into constructive channels by the Labour Government. Let us by all means have a commission of inquiry into the industry, if that is all that the Government can do. I believe that to be absolutely necessary. We should give the industry first-aid treatment by cutting the Purchase Tax, by revising the hire-purchase system, by easing the credit squeeze and by directing contracts into Coventry and similarly affected cities.
Let us always bear in mind that these measures will deal with certain of the symptoms of the malaise of the industry. What is necessary, in order to deal with its fundamental disease, is a complete overhaul of the structure, and that I believe can be done only through nationalisation.

2.12 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll): Perhaps it would assist hon. Members if I intervene now to explain the attitude of the Government towards this Motion. May I start by thanking hon. Members concerned for giving me an early indication of the revision of the original Motion as that revision certainly lightened my task when preparing for this debate.
I welcome the opportunity provided by this debate to discuss the problems of one of our great industries which affect the livelihood of many thousands of workpeople and have an important bearing upon our export trade. The debate has been extremely interesting, and hon. Members on both sides of the House have made many constructive comments and suggestions. The hon. Member for Rugby (Mr. J. Johnson) made a moderate speech which I shall look forward to reading in order to make sure that I do not miss any of the points to which he drew attention. As was to be expected, the hon. Member for Coventry, South (Miss Burton) made a most sincere and moving appeal on behalf of many of her constituents who are suffering at the present time.
We may all take it that by the phrase "the motor car industry" we really mean the motor vehicle industry, that is to say the manufacture both of passenger cars and commercial vehicles. Throughout my remarks I shall refer to the motor car industry as including generally both passenger cars and commercial vehicles. The motor car industry is a fine industry and is doing a very good job. We must be careful, I think, particularly in this House, not to overdo our criticism of the industry because that will have a disproportionately serious effect, particularly abroad, where these criticisms receive a good deal of attention.
I think that some hon. Members have gone too far in advertising the Volkswagen as freely as they have done. I wish that they had advertised a few British models in this Chamber and not so excessively advertised the models of our Continental competitors. The hon. Member for Coventry, North (Mr. Edelman) referred in glowing terms to the French motor cars.

Mr. Edelman: The hon. Gentleman must be aware that I referred to the Renault works in order to alert the country to the nature of the competition which it is facing. That was obvious from the context of my remarks, and I am astonished that the hon. Gentleman should suggest otherwise. My words were in no sense intended to disparage our own remarkably good cars.

Mr. Erroll: Nevertheless, I am quite certain that the advertising manager of the Volkswagen organisation will be


delighted at the amount of free publicity for the Volkswagen which he has received in the House today.

Mr. J. Johnson: Is the hon. Gentleman objecting to the facts as they were stated, or to the fact that people do make factual statements which are correct?

Mr. Erroll: I think it essential to preserve a sense of proportion in this matter. I am not suggesting that the Volkswagen is not a good vehicle, but I am saying that there are plenty of good British vehicles; and I think it unfortunate that some reference has not been made to those excellent British productions at the same time as so much praise was being bestowed upon our Continental competitors.

Mr. Chapman: Mr. Chapman rose—

Mr. Erroll: No, I cannot give way, I think that I should get on with my speech.
The hon. Member for Coventry, North, referred to the nationalisation of the motor car industry. It is interesting for hon. Members on this side of the House to know that at any rate some sections of the Labour Party are in favour of nationalising the motor car industry. I am sure that we shall remember this when the time comes.

Mr. James Griffiths: The party opposite need something to remember.

Mr. Erroll: If I may continue, I think I should make plain that certain longterm difficulties were becoming apparent in the industry in the middle of last year and these were aggravated by the exceptional short-term difficulties caused by the rationing of motor fuel. With the agreement of the House, I propose to deal first with the short-term difficulties, then to turn to the long-term problems and, finally, to deal with the proposal in the Motion, namely, to set up an independent commission of inquiry. It is only when we have reviewed the problems of the industry that the House can decide on the desirability of such a commission.
The rationing of petrol and diesel fuel was undoubtedly a serious setback for the motor vehicle industry. Faced with the prospect of extremely limited rations of petrol, it is understandable that

would-be purchasers of new cars and light commercial vehicles should decide to defer their purchases and to wait until conditions became more favourable. To meet that situation, the Government took the important step of relaxing hire-purchase restrictions, and that was announced by my right hon. Friend the Minister of Labour and National Service on 20th December. Instead of an initial deposit of 50 per cent., only 20 per cent. is now required. The hon. Member for Rugby said that 50 per cent. was still required and I am glad to be able to inform him that the amount is only 20 per cent.
That had a more stimulating effect than could have been hoped for. The sales of private cars bought on hire purchase in January were 70 per cent. more than in December, and the sales of light commercial vehicles were up by about 60 per cent. The relaxation had an even more stimulating effect on second-hand sales, and this is important, because a strong used-car market assists the sale of new cars.
Hon. Members may ask why the relaxation was not extended to medium and heavy commercial vehicles and motor coaches. These vehicles, while subject to fuel rationing, were not so drastically cut down in their supplies. Operators could still continue to replace their vehicles at a normal rate provided they were performing essential work and, therefore, were receiving reasonable supplies of fuel. Motor coach operators who had been hard hit by fuel restrictions will, in the next rationing period, receive no less than 75 per cent. of their normal supplies and they should, therefore, be able to place their orders for that class of vehicle without delay.
While talking of delay, I should like to say a word to those who are deferring their purchases of new cars or commercial vehicles because of fuel rationing. There is no doubt, as several hon. Members have suggested, that when rationing ends there will be a rush for new vehicles. It is surely far better to buy now, with the advantage of immediate delivery, than to have to wait until later only to find that one is joining a queue.
Before passing to the long-term problem, I should like to remark on the good sense shown by the distribution


and servicing garages scattered throughout the country.

Mr. Shepherd: I appreciate my hon. Friend's point that we should encourage people to buy now instead of postponing their orders. Would it be possible to obtain from the Treasury a statement that there is to be no reduction in Purchase Tax in the next Budget?

Mr. Erroll: I assure my hon. Friend that I was not going to leave out any reference to Purchase Tax. It comes very soon in the course of my remarks.
I was referring to the distribution and service side of the industry. Instead of complaining about difficulties, those sections of the industry have responded to the challenge. Distributors have taken cars into stock and actively canvassed prospective purchasers. Many service garages have circularised their customers, pointing out the advantages of a thorough overhaul while petrol rationing is with us. This is characteristic of the British spirit—to turn a difficulty into an opportunity.
I want now to turn to the long-term problems. These were becoming apparent during 1956, before fuel rationing aggravated them temporarily. A number of hon. Members have referred to Purchase Tax, hire-purchase restrictions, the credit squeeze and export problems and some to over-expansion and the labour problems which have followed. I should like to start by referring to Purchase Tax. Some hon. Members have made a case for a temporary reduction as a sort of shot in the arm. I ask those hon. Members to pay heed to the very cogent remarks of the hon. Member for Leeds, West (Mr. C. Pannell), who put a strong case against a temporary reduction in Purchase Tax as a shot in the arm.
It is understandable that any industry whose products carry a high rate of Purchase Tax has a right to complain and, when circumstances are adverse, to seek a change in the rate. That is no more than reasonable and is to be expected. I must, however, point out that the rate has not changed very much during the last five years and can hardly be described as the factor dominating the level of vehicle sales at any particular period of time.
Hon. Members have, quite rightly, referred to the tax, but they will know as

well as I that public speculation about the possibility of a reduction in the tax would tend to stop sales altogether and do a great deal of harm to the industry. In any case, Purchase Tax is a matter for my right hon. Friend the Chancellor of the Exchequer. I hope that the House will allow me to leave the subject at that.
Hon. Members have said that the hire-purchase restrictions have hit the industry, and that may well be, but they were not designed to hit the motor car industry as such. These restrictions were applied to the whole range of goods which could be acquired by hire purchase, as part of the Government's policy for restricting credit and compelling the purchaser to put down more of his own money at the time he acquired the article. These restrictions were designed not as an attack on the motor industry, but as an attack on the demon of inflation, and they have achieved considerable success when viewed in this wider context.

Mr. Chapman: That is not what the Prime Minister said. The Prime Minister said that these measures were deliberately designed to have an influence on the motor car industry. He said that it was obviously necessary, in the national interest, that there should be a shifting of resources from the motor industry to other industries, at least until the industry could expand its earning power in exports. That was part of a speech in which the Prime Minister justified the forcible contraction of the industry by the Government.

Mr. Erroll: I do not think that there is any conflict of view between what the hon. Member has just said and what I have said myself. Because of the exceptional difficulties caused to the motor industry by petrol and fuel rationing, some relaxation in the hire-purchase restrictions was nevertheless justified. As I have said, the results have been remarkably beneficial.
I should like to turn now to the export problems. Many hon. Members have referred to the export difficulties facing the motor industry and we had from the hon. Member for Leeds, West a most entertaining account of his personal experiences in North America. I hope he will forgive me if I do not try to reply to all The points he raised, but I will certainly look through the report of his


speech in HANSARD and see that the most appropriate points are followed up.

Mr. A. J. Champion: Not forgetting the fourth floor.

Mr. Erroll: I shall certainly not forget the fourth floor.
I must admit that the decline in home sales has not led to any increase in the total volume of exports, but, nevertheless, a higher percentage of overall production has been exported. It is a very big total. To listen to some hon Members, one would have thought that the motor car industry was not exporting anything at all. In 1956, however, no less than £113 million worth of cars and chassis were exported from Britain. That is a fine total and one of which the House can be justly proud.

Miss Burton: Would the hon. Gentleman give the proportion of exports to production instead of the cash value?

Mr. Erroll: I do not think that I can sort that out.

Miss Burton: I asked in my speech whether the hon. Gentleman would give that important figure.

Mr. Erroll: If I am not able to bring it into my later remarks, I will undertake to provide it for the hon. Lady afterwards.

Mr. J. Johnson: I asked the Parliamentary Secretary to compare the exports at the end of 1955 with those of 1956. Will he kindly give the difference between the last three months of 1955 and 1956, in which he will find a considerable fall, possibly of 15 per cent.?

Mr. Erroll: I am going on to give more figures which may, I hope, meet the points which have been made.
The important thing about these high figures of exports is that the exports have increased in some of the most important markets, notably in North America, where exports of cars in 1956 were 65 per cent. above the 1955 level and earned about 67 million dollars in that year. That is a fine achievement in one of the most difficult markets.
Such decline as occurred was mainly accounted for by the fall in exports to Australia and New Zealand, the industry's leading export markets, where

import restrictions were intensified in 1956. There has been a recovery in Australia's balance of payments, but she does not feel that the time has yet come to relax import restrictions on motor vehicles. Nevertheless, the prospects in North America continue to appear good, and that is most encouraging.
As regards employment in the industry, as most hon. Members will have noticed by hon. Friend the Parliamentary Secretary to the Ministry of Labour listened to the opening speeches of the debate. He and I have discussed together several of the matters which were raised, particularly by the hon. Member for Coventry, South and several other hon. Members.
I should like to say frankly to the House that I dislike talking about unemployment in terms of percentages. I think always of the effect on the home of the man coming back at the end of the week, saying that he has no work to return to the following week. I believe that the British people want to earn, and deserve, their standard of living, and I personally am always unhappy at the prospect of any man willing to work being unemployed in our island.
It is our task and duty to try to maintain full employment in this land of ours for all those willing to do a day's work, and that remains the policy of the Government. I should add that it is a policy which we are actively pursuing. Unemployment is even lower under a Conservative Government that it was before, which is surely proof that we are not, as was suggested by one hon. Member, planning for redundancy.
However, at the centre of things, we must concern ourselves with trends, figures and percentages if we are not to be either panicked into premature decisions on the one hand, or perhaps lulled into complacency on the other. So, in my next few remarks, I shall refer to figures and percentages in an endeavour to assist hon. Members. The situation today is that large numbers of men were attracted into the motor industry by the prospects of larger wage packets, comprising bonuses and overtime earnings in many cases. Now, as is well known, a readjustment is taking place. Men are returning to their former jobs, or trying their hands at different ones.
The hon. Member for Leeds, West referred, I think, to retraining.

Mr. Pannell: I was referring to redeployment. Retraining was referred to by my hon. Friend the Member for Coventry, South (Miss Burton).

Mr. Erroll: I should like to make it plain that it is the Government's policy that the main part of training should be undertaken in industry and not in Government training centres. This is the policy of both sides of industry, and I should like particularly to stress that. It is also significant, incidentally, that, as I think the Minister of Labour himself told the hon. Lady on 22nd January, the number of applications for training from persons living in Coventry declined during 1956.
I now turn to the figures in the industry itself. During 1956, the number employed in the manufacture of motor vehicles, parts and accessories fell by nearly 50,000 from a total of over 500,000 at the end of 1955, but that total was still higher than it had been in 1951. There were, in addition, about 60,000 on short-time throughout the first half of January. Since then there has been some improvement, and I think that is significant. Short-time working for the week ended 16th February is estimated at about 35,000. Two of the main manufacturers resumed full-time working at the end of January. Although 11,000 workers left the industry since the Suez Canal was closed, the number unemployed on 14th January was only 2.600 higher than on 12th November.
To refer to the special problem of Coventry, I should say that unemployment was below 0·5 per cent. until June, 1956, and it is now only 20 per cent. in February—a place, incidentally, where no fewer than 30 per cent. of the population are employed in making motor vehicles and accessories. I found the figures given by the hon. Member for Coventry, South a little hard to follow, because one gets involved so easily, I find, in a percentage of a percentage. Perhaps I may be allowed to try to disentangle the various figures.

Mr. Arthur Moyle: May I ask the hon. Gentleman to make the point clear to me? He spoke about the short-time workers. I gathered that he said that the total was

36,000. If I am right, I should like to ask him how many of that number are to be found in the Birmingham district.

Mr. Erroll: I cannot give that figure without going into the matter more closely. It is probably tucked away in the voluminous papers I have, and I cannot suspend the debate while I am looking for it.

Mr. Moyle: I can tell the hon. Gentleman that 36,000 is correct.

Mr. Erroll: Thirty-five thousand, not 36.000.
The figures given by the hon. Member for Coventry, South referred, I think, to the percentage of total unemployed persons in Coventry who have been unemployed for six months or more.

Miss Burton: Since May.

Mr. Erroll: The figures of the Ministry of Labour are slightly less. Whereas the hon. Lady spoke of 11·4 per cent. in December, 1956, the figure of the Ministry of Labour is about 8 per cent.

Miss Burton: My information has come from the Ministry of Labour employment exchange in Coventry. I can give the Minister the letter. I asked the manager for the figures. I have them here, and they are 11·4 per cent.

Mr. Erroll: I shall be very glad to take over that letter at the end of the debate.
In any case, I think that it is more realistic to talk about the actual number of workers involved rather than get involved in these percentages. The actual numbers involved were 32 in June, 1956; 83 in September, 1956; and 167 in December, 1956. These are out of a total of 173,000 in civil employment in Coventry. Thus, in December, if I may go back to percentages, there were less than one-tenth of 1 per cent. of those employed who had been unemployed for six months or more.

Miss Burton: The way in which the Minister has put the figures sounds as if there was full employment in Coventry. I wish that he would come to Coventry and speak at a town's meeting.

Mr. Erroll: I would always find it difficult to resist an invitation from the hon. Lady.
I have, also, the figures for which the hon. Lady was pressing me earlier. In 1956, 46 per cent. was exported and in January, 1957. no less than 58 per cent. of total production was exported. Both these percentages relate to numbers of units of all vehicles.
As reference has been made to Birmingham, I should like to refer to the good position there. Unemployment was about 0·5 per cent. until July, 1956, and it rose to only 1·0 per cent. for the rest of the year.
The hon. Member for Rugby referred to the situation in his own constituency, although I understand that the villages outside supply certain workers to Coventry. I believe that there is a good deal of movement between Coventry and Rugby and in the reverse direction. Nevertheless, Rugby remains an area of marked labour shortage. In February, only 210 were unemployed out of a population of 27,000.
The hon. Member for Coventry, South referred to fee-charging employment agencies. In a free country there is no reason why these agencies should be prohibited, but it was announced by the Home Secretary, before Christmas, that the Government proposed to seek powers to control their activities. The Home Secretary is now in consultation with the T.U.C., the British Employers' Confederation and local authorities. There is no reason to suppose that these agencies are operating to the detriment of the employment exchanges, or, at least, to any great extent. Exchanges make every effort to obtain vacancies. They do not just sit and wait for them. This is really a supplementary service, but in view of some understandable anxieties the Government are looking into the matter.
In the next few minutes I will turn to the prospects in the industry. The hon. Member for Rugby, choosing a very happy phrase, spoke of a "slumplet and not of a slump. The picture which emerges is of a self confident and virile industry which has experienced a setback. The decline has been arrested. The average weekly rate of production in January was higher than in December. The special weekly returns which the Board of Trade has been receiving show that, in general, there has been a steady

increase in the weekly rate of production through January and in the first two weeks in February.
The disastrous fire at Jaguar's has distressed everyone, but the firm's efforts to get things going again surely serve as a symbol of the spirit of the industry. Management and men are determined to restore production as rapidly as possible and to fulfil their dollar and other export orders with the least possible delay. The latest news is that Jaguar's hope to be back on full production in three or four week. [HON. MEMBERS: "Hear, hear."] That is a very fine effort and I am sure that every hon. Member will wish them the best of luck in their future production.

Mr. J. Johnson: They were turning out 26,000 cars per week in 1955, and in December, 1956, there was a low record of 14,500. What is the figure now? What are they now producing in cars per week?

Mr. Erroll: There are two difficulties in trying to work out the figure. The first is that February is not yet over. The second is that December counts as a five-week month and February as a four-week month. We shall have to get out the slide rule before we can find the proper percentage between those two months. Hon. Gentlemen have referred to my having been an engineer; the slide rule is part of my normal equipment, only not at this Dispatch Box.
Leading firms in the industry are going ahead with their expansion programmes. They certainly are confident. Short-time working has been eliminated at Standard's. Vauxhall's, who announced a new model earlier this month, also announced on 15th February that 1,900 men, dismissed earlier, had been invited to return and that, in addition vacancies now exist for hundreds more men. I appreciate that they are advertising for some of these men from the Coventry area, but hon. Members must consider the alternative, which is that the Vauxhall organisation should splinter off a small part of its plant and try to set it up in Coventry.
Where the numbers involved are relatively small, it surely makes more sense that men should be willing to go to the plant rather than that a great, modern, integrated plant should be fragmented and scattered about in different parts of the country.

Mr. Johnson: Mr. Johnson rose—

Mr. Errol: I must get on with my speech for the sake of other hon. Members who may wish to speak after me. British Motors Corporation are working overtime on the M.G. "A" and Morris Minor assembly lines, to meet large overseas orders, particularly from the United States of America. Jaguar's, before the fire, were working at full pressure to meet the export demand for their cars.
I have had the opportunity of meeting some of the leaders of the industry during the last few weeks. I would not altogether accept the view put forward by my hon. Friend the Member for Cheadle (Mr. Shepherd) regarding them. I have been most impressed by their confidence in the future.

Mr. Shepherd: I did not suggest that they were not confident of the future. I have myself been criticised for taking too optimistic a view. I said that the prima donna mentality was still present and that the transition from making the size of car prevailing pre-war to the type of organisation necessary for making the existing size had not taken place.

Mr. Erroll: I do not accept the idea that the leaders of the industry have a prima donna mentality. It is a historical fiction, as my hon. Friend would find if he were to examine the facts. Of course, there are difficulties and it is right that the Government should be told about them but the important thing in this industry, as in all great industries, is the spirit of the director, managers, and men. It is a good spirit, and the hon. Member for Coventry, North sought to suggest—

Mr. Edelman: What the hon. Gentleman has just said is an absolute fiction.

Mr. Erroll: In this industry today we have the men who are determined to lead it out of its present difficulties into a stable and prosperous future. Furthermore, hon. Members who have been critical of the industry should realise that the British car is a fine product, whatever foreign competitors or Britain's detractors may say. We may well see increasing sales at home and abroad in the months ahead.
I have been asked to say what the Government are doing to help exports.

Important steps were announced in December, 1956, during the debate on the economic situation. The Export Credits Guarantee Department has been evolving new techniques designed to support and encourage an aggressive sales campaign and to help in such matters as financing the holding of far larger stocks abroad. It is ready to place all its facilities at the disposal of manufacturers. These new techniques are flexible and adaptable to a great variety of circumstances and I hope that full use will be made of them.
Many other points have been raised in the debate and I should like to touch upon them, particularly technical matters such as the merits or demerits of different systems of transmission, engine design and layout, standardisation, and the size of the home base. I cannot do more than refer to these briefly.
A striking improvement has taken place in sales and service overseas in the last eighteen months. I believe that it is one effect of the credit squeeze. The improvement is very marked in many areas. Hon. Gentlemen who have been quoting other examples may now be getting somewhat out-of-date on this matter. My hon. Friend the Member for Cheadle referred to standardisation and to what he aptly described as "standardisation under the bonnet." A great deal of standardisation has taken place under the bonnet, but it has hardly been noticed. British manufacturers have understood that the public desire a wide variety of models. They continue to contrive to make cars look very different in their exterior, but a considerable measure of standardisation has taken place under the bonnet.
Some hon. Members have argued for a large home demand in order to mount the export sales. The hon. Member for Leeds, West said that having too large a home market made it difficult for manufacturers to develop cars suitable for export. As hon. Members will see, there is scope for argument as to what is the right way to proceed. Surely those who are in the industry are in the best position to judge. They must retain a constantly vigorous and flexible view of the prospects ahead. I do not think that we can do better than leave them to get on with the job which, hitherto, they have been doing so well.
I now want to turn to the proposal for an independent commission of inquiry into the industry. This is not a new suggestion. It was first made, I believe, at a meeting of the Executive Council of the Confederation of Shipbuilding and Engineering Unions in April, 1956, and was forwarded to the Board of Trade. As hon. Members will realise, the industry consists of a number of individual manufacturers who are in keen competition with each other and with overseas competitors; individual and independent direction, from what I have said already, would seem to offer the best guarantee of success.
Furthermore, there is already in existence the National Advisory Council, by means of which the circumstances of the industry are fully discussed. The Board of Trade is fully aware of the problems and the opportunities of this industry, although some hon. Members have suggested that officials would not know very much about them. We are further informed by the regular meetings of this Council, which is very representative. Permanent membership of the Council includes seven manufacturing members representing the different sections of the industry, three Government members, four Trade Union members, and one independent member.
A memorandum by the Confederation of Shipbuilding and Engineering Unions on the general position in the car industry, which was fully discussed at the last meeting of the National Advisory Council in October, 1956. The Council is to meet again at the end of this month. It keeps the present circumstances and prospects of the industry under review and provides an appropriate forum for periodical discussion of the industry's problems. Those discussions are frank and free and remain confidential so that the maximum benefit may be obtained from them by those participating.
It is difficult, therefore, to see how an independent commission of inquiry could be justified. If one were appointed it is not clear how its recommendations, if any, could be implemented. We already have a vigorous, self-reliant industry and a valuable National Advisory Council, with representation drawn from all parts of the industry. That, surely, is enough for the future. Accordingly, I must advise the House to reject the Motion calling for

the setting up of an independent commission of inquiry.

Mr. Harold Davies: I have not taken part in the debate and I so like the Minister that I hate getting at cross-purposes with him, but I sincerely wish to tell him that there is a point about the suggestion for an independent inquiry which should be looked at. My experience about the Far East and everywhere else is that politics have bedevilled industry and trade. What is the Board of Trade doing about these things in the motor industry, especially the heavy motor industry? It has higgled, haggled and dawdled. Cannot a bit of fresh air be blown through the Board of Trade, to encourage exports to the Far East? That point has not been answered at all today.

Mr. Erroll: If the hon. Member had spoken in the debate I had some material available to use if he had raised that subject. As it was not raised, and I had so much to say, I did not make any reference to it. Otherwise, I would have tried to oblige the hon. Member.

2.54 p.m.

Mr. Roy Jenkins: I think that we have certainly had a useful debate on this important subject which was chosen by my hon. Friend the Member for Rugby (Mr. J. Johnson), but I am not sure that the reply of the Minister has added anything very useful to the debate. He has given us a few snippets of information, but he has certainly given us no indication of what we have been seeking for some time and what we should have liked to have today—the general policy of the Government for the future of the motor industry.
I understood the hon. Gentleman in his closing remarks to say that in his view, and presumably that of the Government, everything is now perfectly all right in the industry. That seems to be an extraordinary view. He painted a picture of a self-confident industry marching towards a glorious future, a picture which would not be recognised by most people in the industry at present. The part of the speech which most remains in my mind was the extraordinary attack the hon. Gentleman made at the beginning of his speech on one or two of my hon. Friends for not having given a sufficient advertising puff to the products of the British motor industry. He said that my hon. Friends talked a


great deal about foreign motor cars, but should have given a puff to our own motor cars.

Mr. Erroll: Why advertise the foreigners? It does not help the British.

Mr. Jenkins: I should have thought that it was not the duty of hon. Members in this House to give an advertising puff to any motor cars or any products but to try to analyse the problems with which we are faced. The problems with which we are faced, whether we like it or not and with whoever the fault lies, are that in the export market the British motor industry has been having a bad time, not only compared with German competitors, but also with Italian and French competitors in the last few years. Those are the facts, and not all the Parliamentary Secretary's glowing tributes to the wonderful British spirit shown by service garage operators will enable us to overcome the difficulties which we are facing.
One other general comment must be made. It is that although we have not had a very large attendance on either side of the House today, it has been notable that we have had to conduct the whole of our debate without any assistance—even silent assistance—from a single hon. Member opposite representing a motor industry constituency. In this Parliament at least—I would not speak about the next Parliament—it is the case that some motor industry constituencies are represented by hon. Members opposite, but not one of them has thought it worth while to come and take part in the debate. I think that is a notable and unfortunate state of affairs.
The case for some inquiry, for a new approach to the industry, has been made powerfully by my hon. Friend the Member for Rugby and other hon. Friends. My hon. Friend the Member for Rugby began his speech by pointing out the importance of the motor industry in our economy, as also was pointed out by the Minister. The industry has been a very important foreign currency earner and also is a substantial user of imported materials. It is important to regard it as a factor working both ways and which can adversely affect the balance of payments position. The industry employs a substantial number of people and is geographically concentrated in such a

way that swings in the prosperity of the industry can have a more dramatic and unfortunate effect than would he the case if it were more evenly spread over the country as a whole.
Perhaps it is also the case that in the City of Coventry where there is the greatest geographical concentration we also have all the big five firms, two of which perhaps are the weakest. Therefore, a peculiar local difficulty has been produced, although of course the problems are not only the problems of Coventry, but are also to an extent problems of Birmingham and the whole area covered by the industry.
I think it is probably also the case that the industry is by its very nature in any event perhaps a little more liable to swings from prosperity to a condition of far less prosperity than some other industries. This no doubt must become the case to an increasing extent the more that the home demand for the products of the industry becomes a replacement demand, because a new car to replace an old car is something which can easily be postponed for a year or so, and if a large number of people simultaneously take a decision to make the postponement, it is bound to be an unsettling factor in the industry's prosperity.
What has happened recently is that Government policy, so far as it affects the industry, has deliberately accentuated these swings, which might in any event have taken place to a small extent. If we look back over the history of the industry, primarily for the last two years but to some extent for the last five or six years, we see an extraordinary picture.

Mr. Shepherd: Would the hon. Gentleman suggest that we should have maintained the level of home demand in face of a decline in the export percentage?

Mr. Jenkins: If the hon. Gentleman will allow me to develop the point which I am making, I think my attitude to that question will emerge clearly.
It is true that from 1951 to 1955 the industry underwent a very sharp period of expansion. My hon. Friend the Member for Rugby pointed out that the average increase in the output of motor cars from 1951 to 1955 was 17 per cent. a year, which was a very substantial increase. Against that must be set the fact that in the same period the average


increase in the number of home registrations was 35 per cent. a year. Since 1951, therefore, the home market has been growing much faster than the total output of the industry.
The export market continued to grow up to 1954, but to grow slowly and at a much less rapid rate than that of our competitors abroad. Indeed, in 1955, the year of maximum increase in output in the industry, the export market shrank a little. From the latter part of the period of growth, 1953 or 1954, onwards, the industry began to announce very large plans for capital investment leading to an expansion in capacity. The plans for capital investment which the industry announced and has recently been putting into operation have been plans for extensive and not simply intensive investment; they have sought not merely to increase the efficiency of the industry, the need for which nobody in his right mind would deny, but also greatly to increase the number of cars which the industry is capable of producing.
Hon. Members on both sides of the House have expressed grave doubts whether extensive and not intensive investment programmes of this size were wise for the industry, and it is no use the Parliamentary Secretary telling us that we need not worry about the industry because he has found its leaders self-confident about the future. I think it was the hon. Member for Cheadle (Mr. Shepherd) who pointed out that nobody has doubted that they were self-confident. What has been doubted and is still in the minds of some of us is whether their self-confidence is well founded. That is what we should have liked the Minister to tell us.
As I have said, we had a period of rapid expansion of production, with exports a shrinking proportion of output, and heavy investment plans. All that happened during the period of the Lord Privy Seal's boom, when it was essential from the point of view of Government propaganda that nothing should be done to mar the beauty of that boom.

Mr. J. Griffiths: Or mar their prospects at the Election.

Mr. Jenkins: Indeed, nothing was done until we reached the autumn of 1955.

Mr. C. Pannell: With the Election already won.

Mr. Jenkins: At that time, when export markets had begun to be much more difficult to find than in 1954, and when restrictions were being imposed in the Australian and New Zealand markets, we had restrictions imposed in the home market. The Australian and New Zealand markets are very important to the industry. Even now I am rather frightened about the dependence of the industry upon the Australians, for I do not think that there is much future in that market.
In any event, the Lord Privy Seal chose the very moment that restrictions were being imposed in the Australian market to squeeze the home market, although he had not thought of doing it during the previous five years. That was the stage at which we had Purchase Tax raised to 60 per cent. and the beginning of the policy of squeezing the home market, which has since been followed by hire-purchase restrictions and the credit squeeze and, finally, as a result of the Suez crisis, the effects of the petrol shortage.
In those circumstances, while I certainly do not believe in an unrestricted home market of limitless size, and while I do not think that the industry can, or should, look forward to that, I certainly think that the industry has cause for very serious complaint about the treatment which it has had from the Government, and the methods and timing which the Government have used in their attempt to squeeze back the industry.
There is no doubt, of course, whatever the Parliamentary Secretary may say about the Prime Minister's remarks, as quoted by my hon. Friend the Member for Northfield (Mr. Chapman), that the intention of the Government over the last year or two has been, quite deliberately, to squeeze back home demand in the motor industry. After all, the Lord Privy Seal, in introducing—or, rather, defending—the 60 per cent. Purchase Tax in the autumn Budget of 1955, said that he would rather have exports than revenue. In other words, he would rather have the demand squeezed from the home market than have the demand on the home market continued with an extra amount of revenue. There is no doubt that that has


been the objective; to squeeze back the industry.
What has made the position particularly confusing is that the Government have never told us to what extent they wanted the industry squeezed back, how long they wanted to keep it squeezed back, and precisely for what purpose it was to be squeezed back. I agree with my hon. Friend the Member for Northfield that it is possible that we have passed the worst for the moment, and that we may return to semi-boom conditions in the autumn, but the fact that we have got into this new position in which, as the Parliamentary Secretary has said, the January output figures show an improvement on those for December makes us even more confused about what the Government have in mind, and what they have had in mind in the past.
Is the Parliamentary Secretary pleased that the January figures for output in the motor industry show an improvement over the December figures?

Mr. Erroll: Mr. Erroll rose—

Mr. Jenkins: Does he—

Mr. Erroll: I was just going to say "Yes".

Mr. Jenkins: Then was he pleased that the December figures were lower than the figures for December in the previous year? I ask, because it is extraordinarily difficult to follow what has been the Government's objective here.

Mr. Shepherd: Mr. Shepherd rose—

Mr. Jenkins: The hon. Member for Cheadle, operating single-handed from the benches opposite, has contributed nobly to this debate today, but it is the Parliamentary Secretary's view on this that I would like to have.

Mr. Shepherd: Surely, it is no use discussing the question of the state which the Government wish the industry to reach without bearing in mind that the whole economic policy has been affected by the Suez affair. The hon. Member really must deal with that issue, and not ignore it.

Mr. Jenkins: The Suez issue, the economic effects of which I do not think that I or any of my hon. Friends would be anxious to minimise, is certainly not the only factor with which we are dealing

here. Indeed, it was the culminating factor; one of a whole series of other blows against the motor industry delivered by the Government, but there is no doubt that a very large part of the cutback in production occurred well before the Suez adventure ever began. One cannot attribute it all to Suez, and I cannot clearly understand the force of the hon. Gentleman's intervention.
The position with which I am dealing here is that the Government deliberately cut back the home market of the industry for a year. There is no doubt that in the last month or so the industry's home market has shown a small sign of expanding. The Government apparently take credit for that, and say what a good thing it is that the home market is expanding. If it is a good thing now that that market should be expanding, why was it a good thing previously that it should be contracting and if we are by the autumn to get back to something like the home market we had eighteen months ago, what has been the objective of the very painful exercise through which we have been in the past year?
This is the doubt and the confusion in which the Government's attitude has left us. We have never been told what the objective of the Government was, how far they wanted to go, or by what methods they were seeking to achieve it. Suppose that our more optimistic prognostications proved true; suppose that by the late autumn of this year there is very little short-time working in the industry and that production is back to the levels of 1955—I am not saying that it will be, but it may be—suppose that happens: what do we then do? Do we begin the exercise all over again? Do we begin squeezing back home demand again? Do we begin again going through the cycle of the last year? That, on all the information that we have had so far from the Government, would be the only possibility which would be open to us to infer from the Government's own assumptions.
What is undoubtedly the case in the motor industry is that its future is, to a peculiar extent, dependent upon Government policy, partly because of the opening up of export markets, strategic control so far as East-West trade is concerned, but for more important reasons too—partly because of the Government's future


attitude to taxation in relation to the industry and partly, as my hon. Friend the Member for Leeds, West (Mr. C. Pannell) mentioned, because of the Government's attitude towards the future road programme of this country.
The size of the home market which we can have and, in consequence, the sort of motor taxation policy which we can pursue must to quite a large extent be geared to the sort of road development programme which we are proposing to have over the next ten or twenty years.
There is also the question of the European Free Trade Area, which was mentioned by my hon. Friend the Member for Coventry, North (Mr. Edelman). That is a decision of Government policy, one with which broadly I would not quarrel, but there is no doubt that the Government's decision to take us into the European Free Trade Area will have very substantial repercussions indeed upon the British motor industry.
Therefore, in every conceivable way the future of the motor industry is bound up not only with its ability to solve its own problems but with the framework within which the Government are to allow it to apply itself to those problems. The attitude which Government spokesmen constantly adopt—not only from the Parliamentary Secretary to the Board of Trade, whom I am not blaming particularly about this situation, but from the previous President of the Board of Trade, the present Chancellor of the Exchequer, the present Minister of Labour and National Service, the Prime Minister, and the Lord Privy Seal—that the industry must be left to solve its own problems, to work out its salvation, does not make sense, because the industry is operating within a constantly changing framework and will continue to do so in the future, and the authority which determines that framework is the Government. Therefore, the industry is not in a position alone and unaided to make sensible estimates about what its future will be.
There is a very strong case here for an inquiry such as is suggested in the Motion of my hon. Friend the Member for Rugby. It is possible that the management side of the industry might itself not like such an inquiry. The Parliamentary Secretary, in the course of his speech, first denied vehemently that there were

any prima donnas in the industry, and then five minutes later, when dealing with the specific question of an inquiry, said that it was absolutely impossible because the competitive spirit was so keen in the industry.
It is difficult to take too seriously the picture of these co-operative motor magnates so anxious to work together for the good of the industry that they would be horrified at the suggestion that there should be an inquiry into how their business is conducted. I think that the industry is in a position in which it should not be able to resist such an inquiry.
The industry, in the period immediately after the war, a period which continued for some time, had very substantial achievements to its credit. It was urged on a great deal by the Labour Government. It required a good deal of urging on before it achieved anything like the export targets which it attained. None the less, during those years the industry had considerable achievements.
However, the present and the future of the industry are not by any means so clear. The future is in doubt. It is an industry which, if it were to operate on a vast scale such as is envisaged by some of the new investment programmes, with a very poor investment performance, could be a heavy luxury for the British economy as a whole. It is an industry, too, which, as my hon. Friend the Member for Leeds. West pointed out, is not backward in asking for special treatment when it runs into difficulties.
Therefore, I would say that the industry, though it has achievements, is not in a position resolutely to resist the suggestion that the time has come when an independent inquiry would serve a useful purpose in making us all better informed about the industry and in turning the searchlight of public opinion on to some of the problems which the industry is failing to solve. I certainly do not consider that the Parliamentary Secretary has given us any arguments to set against this suggestion. Despite his strong words, he has not given us any greater feeling of confidence in the future of the industry.
I had hoped that he would accept the inquiry, but I must say that there is one thing even more important than acceptance of the inquiry, which is in


itself both desirable and important, and that is that the Government, who have in fact affected the industry so much by their policy in the last few years, should give up their attempt to wash their hands of the problems of the industry when difficulties arise. The Government must not attempt to say that these problems have to be solved by the industry itself and that they have some fine industrial purpose or plan at the back of their mind which they are not able to divulge at the moment ether to us or to the industry.

3.16 p.m.

Mr. Arthur Moyle: I should like, first, to commend my hon. Friend the Member for Rugby (Mr. J. Johnson) for choosing this Motion, the terms of which are peculiarly of the greatest importance to the West Midlands. As I happen to represent a constituency on the fringe of Birmingham, and adjacent to the famous Austin Motor works, I represent a larger number of motor vehicle workers, I believe, than any other hon. Member outside the City of Coventry itself.
The subject of debate today is of the greatest interest to my constituents and to very many people in other sections of the motor vehicle industry. May I say, further, that we owe a special debt to the hon. Gentleman the Member for Cheadle (Mr. Shepherd), who made the only back bench contribution from the benches opposite? I found his speech very interesting, because he did attempt to subject the industry to some kind of economic analysis.
I can well understand the Parliamentary Secretary's pride in British industry. I have never met an engineer who was lacking in pride; like the bricklayer, he is always proud of his particular trade and of his own craft, and that is a sentiment which I share with the hon. Gentleman. But I thought that the assumptions on which he based his speech today were wholly wrong. For example. I do not recall a single speech made from this side, and certainly nothing in the speech of the hon. Member for Cheadle, which in any way denigrated the British product. I did not hear a single reference which could be regarded as promoting the American or French product at the expense of the British.
What I did hear was the statement that it would be advantageous to British

motor vehicle exports if the industry paid greater attention to our overseas service and to the physical conditions on the roads abroad which our cars have to meet. Friends of mine, for example, tour the Middle East and drive to Ceylon almost every year. Last year they made the journey in a Jaguar. One of their complaints was that the driver of a British car is constantly harassed by the absence of garages at which spare parts can be obtained. Travelling in a British car is a nightmare for the driver because of the lack of maintenance facilities, particularly the lack of spare parts at garages.
Their other complaint concerned the absence of British sales representatives. Those representatives have such large areas to cover that the garages are very fortunate to be visited by a British representative every two years. I pass that example to the Parliamentary Secretary for purely objective reasons and without party bias, because these friends of mine are, I regret to say, members of the Conservative Party. I reiterate the point made by my hon. Friend the Member for Leeds, West (Mr. C. Pannell), that we must produce a car which bears some relation to the natural conditions overseas. The hon. Member for Cheadle, though, made the same point.
I want now to refer to the other assumption which the Parliamentary Secretary made. He seemed to charge us with taking an exaggeratedly despondent view of the future of the industry. I refer him to what was recently said by Lord Tedder, the Chairman of the Standard Motor Company. Speaking about the future of the industry, Lord Tedder said:
Quite frankly, unless the Government are willing to find some immediate way of relieving the burdens so as to allow the industry to maintain a reasonable level of production and sales, one can see no prospect whatever of maintaining exports, and every prospect of the whole industry being involved at an early date in a dangerous crisis with all that that implies for its labour force and shareholders.
In the last twelve months the industry in the Birmingham district has been subjected to short-time working and some unemployment. Engineering workers in my constituency are alarmed and despondent because of the lack of certainty about their future in the industry. It is essential that the Government should announce what the industry's future will


be. For these workers, the industry is their life investment and they are entitled to know exactly what the future of the industry will be. Will it be gloomy, or will it be bright? They, more than any others, are entitled to know the facts. That feeling of uncertainty is the result of the experience of the last twelve months.
It is utterly useless for the Government continually to make exhortations to workers to increase production. The engineer thinks in terms, not of his own section of the industry, but of the industry as a whole. In the light of what the motor engineering workers have endured in the last twelve months the question which the men in the workshops are putting to themselves is, "If we increase production, does it mean that we are working ourselves more quickly out of a job?" That psychology is the by-product of the experience of workers in the motor vehicle industry.
Yet, when we speak to the Government about it, they say what they said last March, in the debate on unemployment. In reply to my hon. Friend the Member for Coventry, East (Mr. Crossman) the Minister of Labour said that the Government had no responsibility for the future industrial employment of the workers; that that was a matter for the industry itself. I am very glad that the Parliamentary Secretary to the Ministry of Labour is here, because I submit that the Government have a responsibility in this matter. They must face the social consequences which ensue from men losing their employment.
This is not merely a question of losing employment. The men concerned may be uprooted from the locality where they have lived for years in order to seek employment elsewhere. What statutory power do the Government possess to provide lodging and travelling allowances, and the expenses which are incidental to a worker when he is forced to get employment elsewhere? If the Government have no such statutory power, do not they think that they ought to obtain it?
If we can engage in the Suez exercise, regardless of its cost and its economic and social consequences upon our fortunes, is it not vital that we should face the problem of the possible displacement of skilled workers and assist them in obtaining

employment under reasonable economic conditions, if that employment has to be found in another part of the country, far from the place where they have hitherto been employed?
The old weapons used by employers before the war are no longer available. The big stick cannot now be used in this country. The British Motor Corporation discovered that fact a few months ago in the silly and unfortunate strike which was forced upon the workers by the foolish conduct of that Corporation. Neither can the employers enforce wage cuts as a means of cheapening production costs. They know that neither of those weapons is practicable at the present time. Other means must be employed to deal with the difficulties in the industry.
The Parliamentary Secretary expressed surprise at the conviction of hon. Members on this side of the House that there was no alternative to the nationalisation of the industry. I hold that conviction. In the light of the Government's attitude to the motor engineering industry—which is to disclaim any responsibility at all for it—the only way in which any public accountability can be placed upon that industry, in respect of its conduct in the economy of the nation, is by way of nationalisation.
I should have thought that because the industry has had free play for a good many years now, without let or hindrance from the Government, has employed as many workers as it desired and has expanded itself without regard to the capital needs of the economy as a whole the time had now come when the Government ought to face up to our proposal for a fact-finding commission to discover, first, whether the country can afford the present capital expansion of the motor car industry in relation to the needs of the economy as a whole, and, secondly, whether the future of the industry, as far as it can be ascertained, justifies the huge attraction of capital to itself when so many other industries of vital importance to our export trade are crying out for capital which, because of our present economic position, is not available to them.
Therefore, I say that such a fact-finding commission is essential in order that we may have more knowledge of the state of the industry, the future of the industry and of the kind of economics it


should pursue in relation to our economy as a whole.
There is one important observation I wish to make as far as the employees are concerned. It is that, as a result of the commitments of these workers in the industry and in the localities in which they have lived for years, the Government must regard as one of the first priorities in the whole problem of redeployment of industry the fact that they cannot limit their commitments to the moment when the man is sacked. It is at that point that the social services should come to the aid of the workers in the form of travelling expenses, lodging allowances, and assistance for the provision of housing accommodation in the places where employment is offered to them.
Those are some of the essentials of the present day in connection with this question of redundancy and the necessity for the re-employment of those workers in these industries which are an aid to the export trade of the country.

3.33 p.m.

The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Robert Carr): I had not intended to intervene in this debate, but I should like to say one or two words in answer to the point raised by the hon. Member for Oldbury and Halesowen (Mr. Moyle). I want to confirm that the Government possess powers to grant, under certain circumstances, loans, lodging allowances and grants of various kinds in order to assist people to move from one area to another in connection with employment. They are the same powers which were possessed and thought adequate by the Labour Government when unemployment rates were at least as high as they are now, and we are using them in the same way.
My right hon. Friend has on a number of occasions given an undertaking to the House to keep those powers and their adequacy constantly under review. It would not, perhaps, be out of place if I reminded the hon. Member for Oldbury and Halesowen and the House once again that, so concerned is my right hon. Friend with this problem, that he has set in motion a social inquiry to try to discover what are the problems in this field. That inquiry is now taking place. I realise that it is hound to be a long

inquiry, but, in the meantime, we are keeping the operation of our existing powers under review, and I can assure the hon. Gentleman that my right hon. Friend is by no means indifferent to the very human problems involved in this question.
I am not going into an interpretation of what my right hon. Friend said about it being up to the industry, and not to the Government, to look after these matters except to reassure the hon. Gentleman that it was not the intention of my right hon. Friend to indicate that he or the Government were in any way indifferent to the very human and individual problems involved when industries change their labour force in this way.

3.35 p.m.

Mr. Robert Edwards: I was interested in the statement of the Parliamentary Secretary about the powers of the Government, but the difficulty is that they are not being used very often. They should be used more vigorously and those powers should be known to the work-people.
We must not minimise this problem which arises from the fear of redundancy and the shattering of the living standards of the workers. People have moved to the west Midlands and have established new living standards. A good percentage of their incomes is spent in paying off the mortgage on a house, or else on a little car, or a television set. Then, out of the blue, without any discussion or negotiation with their unions, and in a most arbitrary manner, 6,500 workers in the motor car industry are declared redundant. It is true that other employment is available, on the buses, in the parks and as labourers, but it would be at half the wage which they have enjoyed for the last ten years. This is a new social problem, the like of which we have not seen since the period of the depression which struck this country between the two wars.
A great deal of new thinking is required. We must contemplate this problem in a big way. Hon. Members on this side of the House referred to the Renault works in France and the Volkswagen organisation in Germany. In doing so my hon. Friends were not advertising the cars produced in France and Germany. They were discussing


social organisation. The Parliamentary Secretary seems to have missed the whole point. We were pointing out that in the German motor car industry, which is under a form of social ownership, it was possible to apply automation, to introduce electronic brains, and to increase productivity without redundancy. The same applies to the Renault factories in France. Workers accept these new methods of production without fearing that the machines will produce them out of their jobs.
I repeat that here we have been discussing social organisation. It is grossly unfair for the Parliamentary Secretary to overlook that problem and to charge us with advertising the products of other countries at the expense of our own. That is not the point at all. Where there is public accountability, there is rarely redundancy, and where there is no fear of redundancy there is no fear of abundance; there is not the fear that the worker, by his extra efforts, is producing himself out of a job.
That is why I support the contentions of my hon. Friends that when the Government, in the interests of laissez-faire capitalism and in the interests of a free-for-all, repeatedly state that the business of industry is no concern of theirs, that it is not the responsibility of the State and that thousands of workers can be thrown on the streets, losing their jobs and having their whole living standards shattered, the only solution that we would offer in the future is that the State must accept full responsibility for this industry, including the control of investment—and that means a large measure of social ownership.
Another important point which has been missed in this debate is that whilst the world market for motor cars and vehicles has been expanding, our proportion of that world market has been declining. Certainly, the Parliamentary Secretary has not denied the point made forcibly from this side that the demand for motor vehicles, private and commercial is expanding all over the world.
It is true that our exports of motor cars to the dollar area have increased recently, but not in proportion to the increased demand in the dollar market. German and French cars have taken a higher proportion of that market than

our cars have done. That being so, there is something seriously wrong with the motor industry. Because the daily bread of so many hundreds of thousands of people is dependent upon that industry, it is the responsibility of good government to do something about it and at least to accept the suggestion in our very modest Motion that there should be an inquiry.
One of my hon. Friends has mentioned the political obstacles which prevent us from exporting to the new markets of the world. Is it not time that we had another look at the Battle Act and all the consequences of political decisions taken during the war in Korea, which closed great new expanding markets to British private and commercial vehicles? Surely it is time that we had another look at that Act to see what we can do to get into the great new market of China. We may object to its politics, but China still needs our goods. All the world trades with China. Indeed, the United States of America did over £30 million worth of trade with China last year. We are a trading nation and we depend upon our trade with the rest of the world. If we are not able to get a fair share of the expanding demand for goods all over the world, the living standards of all our people will be undermined.
If there is a recession in the motor industry, it will not stop at the motor industry. It is my privilege to be the General Secretary of the Chemical Workers Union. A great deal of chemicals and plastics go into motor cars, as well as man-made light metals, paint. rubber tyres, acids and all the chemicals that go into the pickling of the metals. If we have a continuing recession of the motor car trade, we also strike a blow at many other trades, including chemicals, paint, light metals, synthetic leathers, and synthetic textiles. It is an endless chain which affects the whole of our economy.
The Parliamentary Secretary was very complacent about the motor car industry and said that everything was all right, that the industry was meeting its difficulties and that the controllers of the industry were alive to all the problems. He began to quote a number of figures to prove to himself, but not, I think, to any one else, how the reduction in the down payments on hire purchase of second-hand cars affected the trade. But, of course, the figures which he quoted


only proved that the trade had increased by about one-half of what it was the year before. In any case, all these figures do not convince the workers in Coventry, the workers in Luton and the workers in Birmingham who have already lost their jabs in the industry and are working in other industries at half the income they were earning in the motor car industry.
It is not enough for an industry so basic and important as the motor car industry only to maintain its production. It is not enough to go back to last year or the year before. Our economy has constantly to expand We have to keep in tune and in pace with the increased demands of the world, and it does not amount to progress if we are just able to maintain the status quo. That is not progress at all. Therefore, I am surprised that the Government have not been ready to accept a Motion of this character. It merely asks for an inquiry into this industry, which everyone agrees is in great difficulties.
For the first time since the end of the war, we have had two disastrous strikes in this industry and may be a very disastrous strike in another section of the industry at Dagenham. That would suggest that there is something wrong with labour relations in this industry, and if there is, it is time that we put it right. There is something wrong with labour relations when, in less than a week, an industry suddenly discovers that 6,500 workers are redundant which involves the whole of the factories of the British Motor Car Corporation in strike action. There is something wrong when Standard Motors, for example, has to automate its tractor factory and can only do so by buying £4 million of automatic machinery from Germany. Every machine that is introduced enables six men to do the work previously done by 22.
In the past, our British engineering industry has been so alive to its responsibilities that it has been able to find work for men who have been made redundant by the introduction of new methods of production. It has been able to find employment for them by developing other sections of the industry. Among the problems of the engineering industry today it is very noticeable that skilled workers in the motor car industry are not able to enter other industries in order to produce the machines that are displacing them. If we are not able to produce our

own electronic devices and automatic machinery but have to buy them from abroad, British industry is in a pretty bad state. That leads to the demand for an inquiry.
Hon. Members have stated that we may soon be entering the European Common Market. That will create political problems for the motor car industry that are not the concern of the industry or of the trade unions, but of the Government. I am a strong advocate of the Common Market. We should not have any fear about breaking down frontiers and allowing trade to move freely. We should not be afraid of plenty, expanding our economy to the point of abundance; we should not be afraid of competition; but the motor car industry is and many of its workers are. If this is a political matter, political decisions will have to be made. We cannot leave that matter to the industry. By accepting the Motion for an inquiry the Government would allay those fears and resolve some of the problems which are bound to arise out of our wholehearted entry into the European Common Market.
Such an inquiry would discuss capital investment in the industry; the size of the industry; what kind of sales organisation we should have abroad so that our motor cars can find markets against the competition of the new cars from the socially-owned industries of Germany and France; what kind of compensation can be paid by the Treasury so that workers become more mobile and housing accommodation for them can be found; and finally, the whole problem of the Common Market and how it affects the motor car industry. I hope that the Parliamentary Secretary will reconsider his decision, and that the Government will be prepared to accept this very modest and constructive Motion.

3.54 p.m.

Mr. F. M. Bennett: I apologise to the House, Mr. Speaker, that circumstances beyond my control did not enable me to be here during the earlier part of the debate. My interest during the last hour has been all the more intense. Listening to the last two speeches, I felt, while not wishing to under-rate the importance of the Motion, that there was a tendency to over-simplify the problem.
I have a particular interest in this matter because I have travelled fairly widely on the other side of the Atlantic where, I suppose, we are striving as hard as we are anywhere else to expand our market. I cannot see that social ownership or nationalisation of the car industry could help us substantially to increase our exports into North America. As one travels over that country one cannot help but find, all the time, that what we are really up against is that with our home market and its particular application because of the high cost of petrol here, our roads and the small size of the country, the sort of car which, of necessity, emerges for the home market is not of itself very suitable for the North American market.

Mr. J. Johnson: It is a bit harsh, since the hon. Member was not present at the beginning of the debate, to hear my hon. Friend the Member for Coventry, South (Miss Burton) and myself, that the bon. Member should talk about nationalisation, which is not mentioned in the Motion and was not mentioned in either of our speeches.

Mr. Bennett: I may not have been here for the earlier speeches in the debate, but I was present for the last two which have been made. I do not think that the hon. Member for Rugby (Mr. J. Johnson) was present then. The subject of the social ownership of these industries was a very notable part of the two preceding speeches. The hon. Member cannot have it both ways; he should have interrupted those hon. Members. They were not interrupted by Mr. Speaker on the ground that they were out of order. Therefore, with your agreement, Mr. Speaker, I think that I have the right to deal with those two speeches.
During my travels on the North American continent I have found that the difficulty is not whether the car industry concerned is in social ownership or nationalised, but whether it produces cars which are particularly suitable to American tastes. We shall never be able to compete for American tastes with the kind of car which is suitable here as against the large car which Americans use. There is not the scope here for that kind of car. Our tax arrangements, our insurance arrangements, our roads, and everything else make it quite impossible

to have that kind of car for the home market and then to compete in the North American market.
As the prosperity of the family increases, Americans go in for a family car. The reason the Volkswagen and the Renault have had some success there is not because of the way they are manufactured. No one cares a hoot about that. The car is often the choice of the young people. One year they may have an M.G., the next year an Aston Martin, and the next year a Jaguar sports car. We have to concentrate on the production of cars for other markets, where the fashion does not change from year to year. If one goes to San Francisco and the Middle West one finds that practically every car is of one make one year, but that fashion then goes and another car comes into fashion.
Oddly enough, there are other parts of the world where the British car industry has an enormous lead because it can produce small cars. We cannot always complain because conditions abroad do not particularly suit our book. Bermuda has been much in the news recently. The Bermudan Government have made a rule that cars there shall be of a maximum width and length because of the narrow roads. They are narrower than ours and we see nothing but British cars being used there. That is simply because there is not an American car made which could pass the Bermudan law. We cannot complain about the conditions not being suitable to us in one market when we have considerable benefits in another.
In these circumstances, I cannot see how nationalising the industry could conceivably improve the flexibility or inventive frame of mind of those concerned. Woolwich Arsenal, with which, in my past military career, I had something to do, has produced many things, but I have never thought of it as a particularly productive organisation when it comes to bright new ideas and flexibility, or something in which commercial considerations are involved.

Mr. R. Gresham Cooke: Steam rollers?

Mr. Bennett: I have not seen very much scope for steam rollers in a wide commercial market overseas.
Reverting to the part of the debate which I have heard, there have been one


or two accusations, notably that the Government have delivered serious blows at the motor car industry. I cannot agree, when I remember the Socialist quota which prevented the number of cars which could go to the home market. I have not the figures with me—

Mr. C. Pannell: The hon. Member has not got anything with him.

Mr. Bennett: —but I would point out—

Mr. Speaker: Order.

It being Four o'clock, the debate stood adjourned.

Orders of the Day — LOCAL GOVERNMENT (PROMOTION OF BILLS) BILL

Read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).

Orders of the Day — ADVERTISEMENTS (HIRE-PURCHASE) BILL

Read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).

Orders of the Day — RATEABLE VALUE (STATUTORY DEDUCTIONS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooman-White.]

4.1 p.m.

Mr. Cyril W. Black: I want to raise the somewhat unexciting but nevertheless important question of differential deductions from gross to rateable value. The House will know that the method of arriving at rateable value in assessing properties is by deducting from the gross value the appropriate deduction set out in the Second Schedule of the Rating and Valuation (Miscellaneous Provisions) Act, 1955.
In the case of gross assessments up to £20 and over £120, the scale of deductions is the same for properties all over the country, but it may possibly surprise the House to know that in the case of gross assessments between £20 and £120 there are two scales of deduction, one for the Administrative County of London and the other for the remainder of the country. We thus have the position that there may be two exactly similar houses, which have the same gross value, one just inside the London boundary and the other just outside the London boundary, and which have different rateable values, the house inside the London boundary having a lower rateable value and the house outside the London boundary having a higher rateable value. That difference in rateable value in the case of houses with a similar gross value can be as much as £4.
So far as general rates are concerned, it does not seem to me to matter very much that these differences should exist, because a lower rateable value means a higher poundage and vice versa, but in the case of other rates which are based upon rateable value and are levied over a wider area than London, the existing position is very unfair indeed to ratepayers outside the boundaries of the administrative County of London, as I hope, quite briefly, to be able to show.
If the London scale of deductions were at all levels similiar to that operating in other parts of the country, it is estimated—and I think reliably estimated—that


the rateable value of London would be at least £800,000 higher than in fact it is, or, to put it in another way, because of these differential deductions from gross to rateable value London, relative to the remainder of the country, is under-assessed to the extent of at least £800,000 rateable value. I want to mention, quite briefly, some of the consequences which follow from that.
First, there is the Metropolitan Police rate. The area served by the Metropolitan Police, is of course, very much greater than that of the administrative County of London, and as a result of the differentiation in the deductions from gross to rateable value, London is underpaying in respect of the Metropolitan Police to the extent of about £64,000 a year, that burden being transferred to the ratepayers in those parts of the Metropolitan Police area which are outside the administrative county. There is thus imposed on the outside areas an unjust additional burden which is, I suggest, manifestly unfair to the ratepayers there.
The water rate is levied by the Metropolitan Water Board and again, the area served by that Board is very much greater than that of the administrative County of London. According to my calculations, which I believe to be approximately correct, the effect of the present position is that the London ratepayers pay £56,000 a year too little to the Board, the deficiency in their payments being made up by an overcharge on the ratepayers outside the administrative County of London who are within the area of the Metropolitan Water Board. That, again, is very unfair.
A greater injustice arises in connection with the Wimbledon and Putney Commons rate, a matter of particular concern to my constituency of Wimbledon. Under quite an old Act, a special rate is levied upon the ratepayers in the areas surrounding the Wimbledon and Putney Commons, and goes to the funds of the conservators, who are charged under the Act with the upkeep, maintenance and administration of the commons.
The levy of those rates falls mainly upon the Wandsworth and Wimbledon rate payers, but the result of these differential deductions is that the ratepayers of Wandsworth who pay the Wimbledon and Putney Commons rate

pay too little, while my constituents have the burden transferred to them and pay too much. It is a matter of very real grievance to them.
In this connection perhaps the most important aspect of all arises in respect of the effect on the education grant made to the local education authorities. As I have said, the rateable value of London is about £800,000 too low, by reason of the increased scale of deductions—from which London benefits—from gross to rateable values between a gross of £120 and a gross of £20 a year. That depression of the rateable value in London, which affects the 1d. rate, also means that London gets a higher education grant than would otherwise be the case, as the grant, as aft present calculated, is, of course, based upon a formula which includes a reference to rateable value. For the purpose of the grant it is an advantage to a local authority to have a low rateable value because the grant is more where the rateable value is low than where it is high.
I have endeavoured to find an explanation of these differential deductions, but it is somewhat difficult to trace the whole history of the matter. So far as I can find, the differentials were brought into existence a good many years ago on account of the fact that it was contended that inasmuch as wages in the building industry were higher in London than outside London, and the principal reason for the deduction from gross to rateable value is to provide for the cost of repairs to the houses on which rates are levied, it was therefore right to adopt a more generous system of deductions in London than in other parts of the country.
Whatever merit there may have been in that argument many years ago, it is certainly not an argument that is in any way adequate today for the maintenance of the existing state of affairs. In the first place, the higher rates of wages paid in the building industry are not confined to the administrative County of London but extend over a very much wider area and take in a large number of the outlying districts which are, as I have shown, prejudiced by the existing arrangement; and if it be the explanation that the higher deduction is in order to cover the heavier cost of repairs, why is it confined to properties with a gross value of over £20 and under £120? The increased cost of


repairs is a factor that operates equally in the case of properties where the gross value is under £20 or where the gross value is over £120. Therefore, I suggest that there can be no merit in that argument in support of the present differential deductions.
There is, in my submission, no justification for a continuation of this differentiation. As the House will know, the Minister may, by Order, vary the deductions. It is open to him, under the existing law, to do so at any time. Having drawn attention to what I think must be admitted to be an injustice, I want to ask the Parliamentary Secretary to make representations in this matter to his right hon. Friend with a view to an Order being made varying the deductions and bringing the deductions in London into line with the deductions outside the London area.
If for any reason the Minister does not feel it expedient at this moment to make such an Order, may I at least ask that he should do so by not later than the time when the new financial arrangements with the local authorities are brought into force, because it is quite clear that any financial arrangements between the central Government and the local authorities which are based in any way by reference to rateable value require as a matter of justice between the different local authorities that there should be uniformity of assessment. That uniformity, I hope I have demonstrated, does not exist at the moment so far as London and the rest of the country are concerned, by reason of these differential deductions.
Therefore, if justice is to be done, it is imperative that this matter should receive attention before any new system of local government finance is brought into existence.

4.14 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins): My hon. Friend the Member for Wimbledon (Mr. Black) has raised the question of the differences between the scales of deductions from gross value to net value for properties in the County of London and elsewhere. I do not propose to argue the statement of the facts as given by my hon. Friend to the House, because, substantially, they are correct, and I do not

want to be repetitive and take up the time of the House.
The first question we must ask ourselves is this: what is the reason for the statutory deductions from gross annual value? The Parochial Assessment Act, 1836—I am sorry to have to go back so far—provided that rates must be made on an estimate of annual value, that is to say, of the rent at which property
might reasonably be expected to let from year to year free of all usual tenants' rates and taxes, and tithe commutation rentcharge if any, and"—
these being the important words—
deducting therefrom the probable average annual cost of the repairs, insurance and other expenses, if any, necessary to maintain them in, a state to command such rent.
Those last words give the reason for the operation of the scales of statutory deductions. They do not, of course, explain why there is one scale for the County of London and quite a separate scale for the rest of the country.
I must say at once that I do not pretend to know whether the difference between these two scales is based on some purely rational factor, or is an accident of history. It has been argued by some people that the cost of repairs in the London area is greater than in the rest of the country. That may or may not be the case. The fact of the matter is that these differential scales of deduction do exist, although, as my hon. Friend has said, in their application to individual, ratepapers they are not particularly large or particularly important.
It is true, as my hon. Friend said, that this differentiation which, of course, affects net annual values on which rates are paid, has one or two rather curious effects. The first is that in the case of the Metropolitan Police and the Metropolitan Water Board, which levy charges both within and without London, it is possible to find cases where, as in the hon. Gentleman's constituency, the statutory deductions are lower, and the contribution of the ratepayer living in a certain type of house will be rather more than the contribution of a ratepayer who lives in exactly the same sort of house but who happens to live across the road on the other side of the administrative boundary.
There is not a great deal in it. In fact, the maximum difference at any point in the statutory deductions between Wandsworth and Wimbledon is a matter of only £4 a year. That arises in the range between gross values of £48 and £102; in the lower ranges it falls to £1, and in the higher ranges also it falls to £1. There is, of course, a psychological effect, also. A ratepayer in my hon. Friend's constituency, for example, may find that his neighbour living in exactly the same sort of house enjoys a lower rateable value, and may feel aggrieved. But that is very largely a matter of psychology, and I do not think it inflicts any undue hardship on my hon. Friend's constituents.
If the scales for London and the rest of the country were to be brought into line, those people who live just outside London, but who contribute to the Metropolitan Police and Metropolitan Water Board, would, no doubt, be a little better off than they are at the present time; but it would lead also to a shift in the rate burden within rating areas themselves, because people whose statutory deductions were reduced would lose to the benefit of other ratepayers in the same area.
As I said, I am not prepared to say this afternoon whether the cost of repairs, insurance, and so on, necessary to maintain properties is higher in London than it is outside. It may be. I should be putting myself in an entirely ridiculous position today if I were to argue that the cost of repairs in Wimbledon is lower or higher than in Wandsworth. That would be quite untenable.
My right hon. Friend has the power to alter scales of statutory deductions by Order which would, I think, require the affirmative Resolution of both Houses. But he can do so only if he wants to alter the scales for one or more classes of property in the country as a whole, in London as a whole, or in the country outside London generally. That, of course, would involve the laying of an Order, which would mean alterations affecting the statutory deductions and, therefore, the rateable values of literally millions of properties throughout the country. I am sure that my hon. Friend will agree that it would be quite unthinkable to undertake an action of that sort between general revaluations of property.
As my hon. Friend knows, we are due, in the absence of any new legislation, to see houses assessed at current rental values at the next revaluation, which is due to take place in 1961. If houses are to be reassessed, alterations, in the rates of deductions will have to be considered before that is done. That, I think, would be the time to review these differential scales. Putting the matter quite simply. I entirely agree with my hon. Friend that these differences exist. Whether they are rational or not, I am not prepared to say. At the moment it is not feasible for my right hon. Friend to rectify what may prove to be an anomaly, but we shall certainly look at it before revaluation in 1961.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past Four o'clock.